2019 (7) TMI 723 - CESTAT MUMBAI

Imposition of penalty u/s 76 of FA - delayed payment of service tax - Manpower Recruitment or Supply Agency Service - alleged failure to pay their service tax liability on or before the due date for the period April 2012 to March 2014 - failure to file returns - HELD THAT:- Penalty under Section 76 is for failure to deposit the tax in time. When admittedly appellants were not depositing the tax by the due date, the penalties need to be imposed even if the appellants claim no mens rea - Demand and appropriation of the amounts paid upheld.

Classification of services - whether these service qualify to be the Manpower Recruitment & Supply Services or are job work services exempted under the Notification 25/2012-ST.? - HELD THAT:- The agreement between the appellant and the M/s Sigma is nothing but a “contract labour” agreement, executed for the purpose of providing requisite manpower and is not a job work contract. Hence the services provided by the appellant cannot be said to be those in respect of which Sl No 30 of exemption Notification No 25/2012-ST shall apply. - appellants are not eligible for the benefit of said exemption

Valuation - addition of Canteen Charges for determining the taxable value - HELD THAT:- The canteen charges are reimbursable expenses for providing the services - Once it is held that these charges have not been recovered from M/s Sigma then by no stretch of imagination can these charges be considered as charges towards providing the taxable service. Hence we hold that such canteen charges which have been recovered by the appellant from their own employees cannot be added to the value determined in respect taxable service provided - Matter for remanded for recomputing the demand after reducing the taxable value by the canteen charges so recovered.

Extended period of limitation - HELD THAT:- Since the fact about non-payment of service tax in respect of services provided to M/s Sigma, by treating the agreement as job work agreement was never brought to the knowledge of department hence extended period of limitation has been rightly invoked by the adjudicating authority - The issue of limitation has to be considered on the facts of case in hand and the conduct of the assessee/ appellant. There cannot be application of the decisions in determining the issue of limitation on the basis of the law laid down therein ignoring the facts of case in hand. - Demand confirmed invoking the extended period of limitation.

Penalty u/s 76 and 77 of FA - HELD THAT:- It is settled law that penalty under Section 76 & 77of the Finance Act, 1994 is for the contumacious conduct of the appellants in relation to delay in payment of tax and filing of the relevant returns. These sections do not require establishment of any malafide intentions and mens rea for imposition of penalty. Penalty u/s 76 justified - The appellants had filed their ST-3 returns by the due date hence the we are not in position to uphold the penalty imposed under section 77(2) of the Finance Act, 1994 and also the late fees imposed in terms of Section 70(1) of the Finance Act, 1994 in respect of these returns. Hence penalties and fees imposed in terms of these sections is set aside.

Penalty u/s 78 of FA - HELD THAT:- Since the penalties imposed under Section 76 is upheld, penalties imposed under Section 78 cannot be justified, Hence the penalties imposed under Section 78 is set aside.

Appeal allowed in part.