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2019 (1) TMI 70 - AT - Service TaxLiability of service tax - washing and ironing services (Dhulai/Estri) - imposition of penalty under Section 77(2) and under Section 78 of the Finance Act, 1994 - Held that:- The Commissioner (Appeals) has given his finding that washing of clothes were done in washing machine with the help of water and washing powder/ liquid for which he held that service given by appellant before 01.07.2012 is not taxable but as negative list under Section 66D or mega exemption Notification no. 25/2012-ST have not contained the name of services provided by the appellant, the further period post negative list is taxable - there are no irregularity in his order on duty liability of the appellant applicable with effect from 01.07.2012, having regard to extension of cum tax benefit as provided under section 67(2) of the Act. Penalties under Section 77(2) - Held that:- While reducing penalty from ₹ 20,000 to ₹ 10,000 under Section 77(2) of the Act, the Commissioner (Appeals) has given his reasoning that ₹ 20,000 was maximum penalty prescribed and as appellant was yet to file the prescribed return for which he considered that it would be improper to invoke Rule 7C and Section 70 of the Act to impose maximum penalty by equating the delay in filing with non-filing of return. Since respondent department has not challenged the same reduction of penalty, such reduction of penalty under Section 77(2) appears to be reasonable. Penalty u/s 78 - Held that:- In the instant case the service provided by the appellant was not taxable before introduction of negative list. It was not filing returns on those scores though it was duly maintaining the record. Further if the contention of ld. Advocate is to be accepted, the rural folk of Indian society continue to follow the same procedure unless being appraised about change of any system, law, rule or regulation and to this extent, the observation of Hon'ble Supreme Court made in Uniworth Textile [2013 (1) TMI 616 - SUPREME COURT] that mere non-payment of duty is not equivalent to collusion or wilful mis-statement or suppression of fact is relevant - in the instant case as there was no proof furnished by the department that suppression had taken place and finding in the order-in-original reveals that appellant had started voluntarily paying the service tax, penalty of equivalent amount under Section 78 of the Act would be a travesty of justice. Service tax liability to be requantified with effect from 01.07.2012 by giving cum-tax benefit in terms of Section 67(2) of the Act - Applicable interest to be levied on requantified service tax liability penalty of ₹ 10000/- in terms of Section 77(2) of the Act is confirmed - Penalty under Section 78 of the Act is set aside - appeal allowed in part.
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