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TMI Blog2015 (5) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... ellate Tribunal, New Delhi (for short, the 'Tribunal'). Vide the said order, the appellant has been held liable to pay penalty under Section 78 of the Act, equivalent to the service tax evaded and recovery of interest under Section 75 of the Act and the order of the Commissioner (Appeals) dated 21.06.2013 (Annexure A-3) has been set aside. 2. The substantial question of law that arises for consideration is as under: "Whether Section 78 of the Act stipulates imposition of penalty on any person liable to pay such service tax or erroneous refund as determined under Section 73A(2) of the Finance Act." 3. The pleaded case of the appellant is that he provides liaisoning and consultancy services and in view of his registration under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled an appeal wherein he took the plea that the said service became taxable from 07.07.2009 onwards and the service tax was collected by mistake and it had already been deposited and there was no deliberate defiance on his part. The First Appellate Authority noticed that the legal consultancy service had been brought under the service net from 01.09.2009 and during the year 2007-08, service tax was not leviable on legal consultancy service and it was his duty to deposit the said amount with the Central Government, forthwith, as per Section 73A of the Act. Accordingly, it was held that the amount collected was not chargeable but it was his duty to deposit with the Central Government and therefore, penalty was not liable to be imposed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person providing taxable service to any person shall pay service tax at the rate specified in section [66B] in such manner and within such period as may be prescribed. (2) Notwithstanding anything contained in sub-section (1), in respect of [such taxable services as may be notified] by the Central Government in the Official Gazette, the service tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in section [66B] and all the provisions of this Chapter shall apply to such person as if he is the person liable for paying the service tax in relation to such service:] [Provided that the Central Government may notify the service and the extent of service tax which shall be payable by such perso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y during which such failure continues or at the rate of [one per cent] of such tax, per month, whichever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of service tax: Provided that the total amount of the penalty payable in terms of this section shall not exceed [fifty per cent of] the service tax payable." 10. Thus, once the appellant was not liable to pay under the provisions of Section 68 since he was not providing taxable service at that point of time, the penalty imposable under Section 76 was rightly deleted by the Commissioner (Appeals). Another factor which has to be taken into consideration is that the penalty under Section 78 also pertains to the penalty for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax and the interest payable thereon is paid within thirty days from the date of communication of order of the Central Excise Officer determining such service tax, the amount of penalty liable to be paid by such person under the first proviso shall be twenty-five per cent of such service tax: Provided also that the benefit of reduced penalty under the second proviso shall be available only if the amount of penalty so determined has also been paid within the period of thirty days referred to in that proviso: Provided also that in case of a service provider whose value of taxable services does not exceed sixty lakh rupees during any of the years covered by the notice or during the last preceding financial year, the period of thirty days s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst Appellate Authority that the service tax had been collected by mistake, on account of the new provision and the office of the appellant was not fully acquainted with the interpretation of the statute due to which the default had occurred and therefore, in view of the defence taken, the Tribunal was not justified, in the present facts and circumstances, to hold that there was a wilful suppression of facts, to bring it within the ambit of Section 78. 12. Accordingly, the substantial question of law is answered in favour of the appellant and it is held that the penalty was not liable to be imposed on him on account of the fact that the service which he was rendering at the time of providing of the service was not taxable. 13. Accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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