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2014 (1) TMI 459 - HC - Service TaxJurisdiction u/s 73 - Bar of limitation - Whether the show cause notices issued to the respondents, seeking to recover service tax under Section 73(1A) of the Finance Act, 1994, as amended with effect from 10.9.2004, for failure to pay service tax and file return as required by the proviso to Section 68(1) and 71A of the Finance Act, 1994, read with Rule 7A of the Service Tax Rules, 1994, could be sustained as within the period of limitation - Held that:- by virtue of the amendment to the word "assessee" in Section 65(5) and the amendment to Section 66(3), the liability to pay the tax is not on the person providing the taxable service but, as far as the service provided by clearing and forwarding agents and goods transport operators are concerned, on the person who pays for the services - even the amended Section 73 of the Act covered only those assessees who were liable to file returns under Section 70 of the Act and in the case of availers of Goods Transport Service, the liability to file return was under Section 71A of the Act and the class of persons coming under Section 71A of the Act were not brought under the service tax net under Section 73 of the Act - Revenue has necessary jurisdiction under Section 73 of the Act, particularly with reference to the limitation prescribed thereunder. Considering the limited purpose for which Section 71A of the Act was introduced to cover the period of six months and in terms of Sub-section (1) of Section 73 of the Act where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the proper officer, within one year from the relevant date, is entitled to serve notice, requesting the assessee to show cause why he should not pay the amount specified in the notice. For the purposes of Section 73 of the Act, ‘relevant date’ has been defined under Sub-section (6) of Section 73 of the Act. Therefore, the contention of the assessee that Section 71A of the Act is just a procedural provision and hence there could be no jurisdiction on the Authority to pass an assessment, is a plea to be stated only to be rejected. In order to levy penalty under Section 78 of the Act, it is necessary to establish that Service Tax had not been paid by reason of fraud or collusion or wilful mis-statement or suppression of fact or contravention of any of the provisions of the Act, with an intent to evade payment of Service Tax - there is no such finding against the assessee of it being guilty of wilfully not paying tax by reason of any of the matters provided in clauses (a) to (e) of Section 78(1) of the Act. Furthermore, Section 80 of the Act, which starts with a non-obstante clause, states that notwithstanding anything contained in the provisions of Sections 76, 77 and first proviso to Sub-section (1) of Section 78 of the Act, no penalty shall be imposable for any failure referred to in the said Provision viz., for failure to pay service tax, for contravention of Rules and Provisions of the Act, or for suppression of facts etc., if the assessee proves that there was reasonable cause for such failure. There was wilful evasion to pay tax or not to comply with the provisions of the Act. As may be seen from the preceding paragraphs, the assessees appeared to have been under the bona fide belief that they are not liable to pay Service Tax and in support of their claim - there was no justification for imposition of penalty, especially when there was no allegation of fraud, mis-representation, etc., Accordingly, the penalty imposed on the respondents/assesees shall stand deleted - Decided partly in favour of Revenue.
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