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

2015 (5) TMI 566 - PUNJAB & HARYANA HIGH COURT - 2015 (39) S.T.R. 736 (P & H) - 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 .....

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ich 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. - 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, f .....

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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 servic .....

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service tax which had then been paid by the appellant. The service tax was required 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 a .....

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of ₹ 6,52,207/-, under Section 78 of the Act. 5. The appellant filed 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 consu .....

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ppeal before the Tribunal taking the plea that since the amount had not been deposited 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 suppres .....

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terest under Section 75 was restored, leading to the filing of the present appeal. 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 .....

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he service and the extent of service tax which shall be payable by such person and 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 .....

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the credit of the Central Government." 9. The penalty provision under Section 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 provi .....

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llant 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 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 .....

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(c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of 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 pa .....

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ce 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 cove .....

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ssioner (Appeals), the Appellate Tribunal or, as the case may be, the court, then, 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 t .....

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