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2017 (7) TMI 603 - HC - Service TaxLevy of Penalty - bonafide belief - reverse charge - lead arrangers - Despite the fact that the assessee had already paid the requisite service tax, the Revenue issued a Show Cause Notice dated 27.12.2007 (SCN). Via the said SCN, the Revenue proposed, to not only appropriate the service tax, which included the educational cess already deposited by the assessee, but also called upon the assessee to show cause as to why interest ought not to be levied under Section 75 of the Finance Act, coupled with penalties under Section 76 for failure to pay service tax and under Section 78 for suppressing the factum of receipt of taxable services from a non-resident service provider. Held that: - upon a bare perusal of Section 80 (i), it opens with the non-obstante clause. Accordingly, it terms of the said Section an assessee can plead for waiver of imposition of penalties levied under Sections 76, 77 and 78 of the Act, if it is able to demonstrate that a "reasonable cause" obtained for non-payment of service tax. The assessee had paid service tax on a reverse charge mechanism basis, as soon as it received a communication dated 15.03.2007. The assessee did not wait for issuance of the SCN. Not only did the assessee pay the service tax, but it also paid interest, albeit, after the demand was confirmed. The assessee, it appears, therefore, verily believed that since, arrangement fee had been paid to ICICI Bank, which is an entity incorporated in India, it is that entity which would be required to pay service tax. The assessee continued to hold this belief and, as a matter of fact took a specific ground, in that behalf, even in the appeal filed with the Tribunal - merely because service tax was paid prior to SCN, therefore, penalty ought to be waived. What is required to be looked at is, the cumulative set of facts obtaining in each case, and then, assessing as to whether non-payment of service tax was a conscious and/or deliberate act of wrong doing and/or deception. Our sense of the matter is that, it was not, and, therefore, the conclusion reached by the Tribunal, in our view, is correct. Since, it is a civil obligation emanating from a statutory offence, imposition of penalty would follow, if, once it is established that the non-payment of tax was a result of a conscious and/or deliberate act of deception or wrong doing. Tribunal has rightly, invoked the provisions of Section 80 of the Finance Act. - Appeal dismissed - decided in favor of assessee.
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