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2019 (1) TMI 566 - AT - Service TaxPenalty u/s 78 - short payment of service tax - appellant had gone to its notice during finalisation of the financial accounts for which it could not revise the same in their return - intent to evade - Held that:- Such short payment was mainly due to the fact that it had failed to furnish proof during assessment that it had fulfilled the criteria of “pure agent” as laid down under Rule 5 and failed to discharge service tax liability under reverse charge mechanism on payment made to the Directors - Show-cause also indicated that appellant had failed to charge and pay the service tax on the value received as pure agent and value of director service for which it had contravened the provision of Section 68 of the Finance Act. There is nothing available in the show-cause that such contravention of the Act or Rule was made with an intent to evade payment of service tax. In the instant case when the nature of service provide by the appellant being marketing and research agency services, why those items like travel cost, local conveyance, interview etc. will not be considered as expenditure for a company engaged in marketing and research agency. Be that as it may, when appellant had not challenged the same those point needs no further discussion except for the purpose that availment of benefits as pure agent was asserted by the appellant and denied by the revenue authority in which case it cannot be said that such denial has attained finality and appellant had therefore contravened the provisions of the Act Rule as contemplated in Section 73(1) proviso. Also, it cannot be said that appellant had not followed the provisions contained in Chapter of Finance Act or in the Rule made thereunder since under erroneous interpretation of the provisions, it had not considered those duty and not discharged those duty liability. On the other hand, when it had met the duty demand without protest after the same has brought to its knowledge, Explanation – 2 to Section 73(3) of the Finance Act is more applicable to the appellant. Penalty u/s 78 set aside - appeal allowed - decided in favor of appellant.
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