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2018 (2) TMI 323 - AT - Service TaxPenalty - liability of service tax on the amount of security deposit collected from the prospective flat owners which was subsequently handed over to the newly formed flat owners society - validity of SCN. Penalty u/s 78 - Held that: - there is no case of suppression or contumacious conduct or any attempt on the part of the appellant to evade payment of service tax. Further it is admitted fact that there was disturbance in the normal carrying out of the business due to freezing of withdrawal in the bank account of the appellant company, which is a reasonable cause for delay in submission of their payment of taxes - penalty u/s 78 set aside. Penalty u/s 77(2) for taking service tax registration late - Held that: - the appellant had suo motu taken registration with the Department. Further it is not the case of Revenue that the appellants had taxable receipts during the period prior to the date of taking registration - no case of penalty under Section 77(2) is made out and accordingly the said penalty is also set aside. Penalty/late fee of ₹ 1,03,000/- u/s 70 of the FA read with Rule 7C of STR 1994, towards late filing of the returns - Held that: - there is reasonable cause for furnishing of returns late due to disturbance in the business, being freezing of withdrawal from the Bank account, but as levy of late fee is not discretionary the same is not interfered with. Levy of service tax on the amount of security deposit - Held that: - the said amount was received by the appellants having character of pure agent and on behalf of the flat owners as their trustee, which amount have been subsequently given to the society formed of the flat owners and this fact is not disputed - demand set aside. Appeal allowed - decided in favor of appellant.
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