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2018 (12) TMI 262 - AT - Service TaxExtended period of limitation - Levy of penalty - Partial RCM - non-payment of service tax under partial reverse charge mechanism - there was a gap of six months between date of receipt of show-cause on 03.12.2015 and date of personal hearing given in May 2016 and appellant had not availed the gap period to obtain copy of audit report - principles of natural justice - Held that:- The appellant had failed to discharge the service tax liability. It is not understood as to why a person who failed to discharge the same cannot be equated with his ignorance to follow the new rule of partial reverse charge mechanism introduced by Notification no. 30/2012 w.e.f. 01.07.2012 and why the same shall be equated with suppression of fact and mis-declaration through ST-3. More importantly, neither the show-cause notice nor any documents relied in Order-in-Appeal and order-in-original, any reference is available as to whether the entire 100% tax component was realised by the service provider and deposited in the government to establish that there was occasion of revenue loss to the government. Partial reverse charge mechanism has been introduced by way of Notification 30/2012 dated 20.06.2012. In the said Notification, w.e.f. 01.07.2012 in case of supply of manpower for any purpose or service in execution of work contract by an individual, HUF or partnership firm whether registered or not including association of persons are required to pay 25% of service tax and the service receiver is required to pay 75% of the said tax - Going by the backdrop of bringing such provision into the statute book, if various literatures are referred, it can be found that this Notification 30/12 has brought a new legislation of taxation to existing system of “reverse charge mechanism” by including “partial reverse charge mechanism” as a new system in respect of specified services provided for certain category of services fixing liability of payment of service tax partially on the service provider and partially on the service recipient. It cannot be said that only because audit party had found non-observance of partial reverse charge mechanism procedure in respect of certain services, without any reference to the categorising of service provider, appellant is to be tested for suppression etc. - there is no hesitation to say that respondent has not brought forth any cogent evidence on record to establish the charge of wilful suppression by the appellant company to invoke extended period of service so as to justify penalty. Appeal allowed - decided in favor of appellant.
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