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2024 (3) TMI 348 - AT - Service TaxSeeking adjustment of interest amount paid - levy of penalty u/s 78 - demand with interest paid before issuance of SCN - HELD THAT - Department was having full knowledge that out of the demanded amount of Rs. 18,47,186/-, the Jurisdictional AC himself has sanctioned refund of Rs. 7,96,757/-. The Adjudicating Authority has erroneously applied the interest rate of 18%, 24% and 30% the Appellant was a small party with annual turnover of less than Rs. 60 lakhs. From the Table given at Page 8 of the OIA (Page 25 of the Appeal Book), it is seen that the turnover of the Appellant was less than Rs.60 Lakhs. Therefore, the Appellant is required to pay 18% interest less 3% concession given to them (Net interest @ 15%) - the Appellant has correctly calculated and shown the interest payable in the Table at Page No. 11 12 of the Appeal Book. As per this Table, the interest payable is only Rs. 2,24,600/-.Admittedly, the Appellant has paid Rs. 94,462/- on 09/06/2017. Therefore, the Appellant is directed to pay the balance interest amount of Rs. 130,138/- on or before 15th April 2024. Penalty imposed under Section 78 - HELD THAT - It is found that the Appellant has carried a bonafide belief that they were providing Service Tax to the Government of Tripura. They did not collect any Service Tax from them. Immediately on being pointed out, they have paid the entire Service Tax which resulted in excess Service Tax of Rs. 7,96,757/-. Even to get this refund of this excess payment, they had to run from pillar to post. Considering these facts, there are no case has been made out against the Appellant towards suppression. Therefore, the penalty of Rs. 10,49,587/- imposed under Section 78 set aside. The Appellant is required to pay the balance interest of Rs. 130,138/- on or before 15/4/2024 - penalty imposed under Section 78 is set aside - appeal disposed off.
Issues involved:
The issues involved in this case are the liability of the appellant to pay Service Tax for a Works Contract undertaken for a government body, the subsequent refund claim for excess Service Tax paid, the interest liability, and the penalty imposed under Section 78 of the Finance Act, 1994. Liability to pay Service Tax and refund claim: The Appellant undertook a Works Contract for Tripura Housing and Construction Board, believing that as a government body, no Service Tax was applicable. Upon being informed by the Jurisdictional Assistant Commissioner, they paid Rs. 18,47,186/- towards Service Tax. Subsequently, they realized they were only required to pay 50% of the Service Tax as a proprietary firm, leading to an excess payment of Rs. 7,96,757/-. A refund claim for this amount was initially rejected but later allowed by the Commissioner (Appeals) and subsequently granted by the Adjudicating Authority. Interest liability and penalty under Section 78: A Show Cause Notice was issued seeking to appropriate the amount paid and impose interest and penalty. The Appellant contended that they had already paid the excess Service Tax before the notice was issued and calculated the interest liability at Rs. 94,462/-. However, the Adjudicating Authority directed payment of Rs. 10,49,587/- towards interest and imposed a penalty under Section 78. On appeal, the Commissioner (Appeals) upheld this decision. The Appellant argued that the interest and penalty were wrongly imposed, presenting a revised interest calculation of Rs. 2,24,600/- and requesting the penalty to be set aside. Judgment: The Tribunal acknowledged that the Appellant promptly paid the Service Tax upon notification, even though they had overpaid due to misunderstanding the applicable rate. The Tribunal noted that the Appellant had paid the excess Service Tax before the Show Cause Notice was issued and had also paid interest in advance. The Tribunal found the interest payable to be Rs. 130,138/-, considering the Appellant's turnover and the interest calculation provided. The penalty under Section 78 was set aside, as the Appellant's actions were deemed to be in good faith without intent to suppress information. The Tribunal directed the Appellant to pay the balance interest amount by a specified date and disposed of the appeal accordingly.
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