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Ajay Kumar Gupta Versus Customs, Excise & Service Tax Appellate Tribunal And Another

2015 (5) TMI 566 - PUNJAB & HARYANA HIGH COURT

Penalty u/s 78 - 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 - Held that:- Once the service tax was not leviable under Section 68 at that point of time and the liability was only to deposit the tax under Section 73A(2), which has been done on 15.11.2008, after delay, but due to the service being not taxable at the relevant time when the invoices were raised, w .....

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ibunal 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. - Decided in favour of assessee. - STA No. 30 of 2014 (O&M) - Dated:- 29-4-2015 - S. J. Vazifdar, ACJ And G. S. Sandhawalia,JJ. For the Appellant : Mr Sudhir Malhotra, Adv. For the Respondent : Mr Sukhdev Sharma, Adv. ORDER G S Sandhawalia,J. The appeal, filed under Section 35 G of the Central Excise Act, 1944 (for short, the 'Act .....

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als) 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 Finance Act under the category of & .....

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red to be deposited by the noticee under Section 73A of the Act, as per the provisions of Rule 6 of the Service Tax Rules, 1994. Accordingly, interest was also liable to be recovered from the noticee along with invoking the penal provisions as provided under Sections 75 & 76 of the Act. 4. Thereafter, on 29.06.2012 (Annexure A-2), the demand of service tax of ₹ 6,52,207/- was confirmed by the adjudicating authority and appropriation was ordered from the amount already deposited and int .....

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peal 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 G .....

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osited by the appellant by 31.03.2008, Section 68 had been contravened and thus, sought the restoration of the orders of the adjudicating authority. The Tribunal allowed the appeal on the ground that since the service tax had been collected for the three invoices, it was required to be deposited in terms of Section 73A(2) but was not deposited till 15.11.2008. It was, accordingly, held that there was a wilful suppression of fact with an intention to evade the tax and the appellant's mala fid .....

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l. 7. That it would be appropriate to take into account the relevant provisions since the factum of the appellant not providing the taxable service as per Section 68 is not denied. The same reads as under: "[68. Payment of service tax (1) Every 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 tax .....

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nd the provisions of this Chapter shall apply to such person to the extent so specified and the remaining part of the service tax shall be paid by the service provider.]" 8. Section 68 provides that the person providing taxable service to any person shall pay the service tax at the rates specified. Admittedly, on the date the invoices were raised, the appellant was not liable to pay the service tax though he had collected the same. As per Section 73A(2), the person who has collected any amo .....

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on 76 refers to Section 68 and the liability to pay service tax, is as per the said section. Section 76 reads as under: "[76. Penalty for failure to pay service tax Any person, liable to pay service tax in accordance with the provisions of section 68 or the rules made under this Chapter, who fails to pay such tax, shall pay, in addition to such tax and the interest on that tax amount in accordance with the provisions of section 75, a penalty which shall not be less than [one hundred rupees] .....

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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 suppressing of value of taxable services. The intention, thus, of the person, has to be for evading the service tax which would impose the liability of the penalty and the section further provides that there has to be fraud, collusion .....

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any of the provisions of this Chapter or of the rules made thereunder with the intent to evade payment of service tax, the person, liable to pay such service tax or erroneous refund, as determined under sub-section (2) of section 73, shall also be liable to pay a penalty, in addition to such service tax and interest thereon, if any, payable by him, which shall be equal to the amount of service tax so not levied or paid or short-levied or short-paid or erroneously refunded: Provided that where tr .....

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roviso 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 thi .....

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n, the benefit of reduced penalty under the second proviso to sub-section (1), shall be available, if the amount of service tax so increased, the interest payable thereon and twenty-five per cent of the consequential increase of penalty have also been paid within thirty days or ninety days, as the case may be, of communication of the order by which such increase in service tax takes effect: Provided further that if the penalty is payable under this section, the provisions of section 76 shall not .....

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