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M/s. IWI CROGENIC VAPORIZATION SYSTEM (INDIA) PVT. LTD. Versus THE COMMISSIONER OF C. EXCISE AND SERVICE TAX, VADODARAII

2016 (2) TMI 174 - GUJARAT HIGH COURT

Levy of penalty u/s 78 - appellant has admittedly paid the entire service tax with interest before filing ST-3 returns - bonafide error on the part of assessee - waiver of penalty u/s 80 - Held that:- Counsel lastly contended that by virtue of proviso to Section 78, if the tax demand is based on records maintained by the assessee the penalty would be 50% of otherwise imposable. He pointed out that the term specified record used in the said provision has now been defined by including an explanati .....

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. FOR THE APPELLANT : MR PARITOSH GUPTA FOR MR PARESH M DAVE, ADVOCATE ORAL ORDER (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. Assessee has filed this appeal challenging judgment of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) dated 29.6.2015 raising following questions for our consideration: (1) Whether penalty equal to amount of service tax is permissible under Section 78 of the Finance Act, 1994 when the appellant has admittedly paid the entire service tax with interest be .....

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e payment of service tax? (3) Whether penalty equal to the amount of service tax could not be waived under Section 80 of the Finance Act, 1994 when there was no evasion of service tax by an assessee, who discharged the entire service tax liability with interest without waiting for any show cause notice or adjudication upon realizing about service tax liability that remained to be discharged? (4) Whether imposition of multiple penalties under Sections 77(1), 77(2) and 78 of the Finance Act, 1994 .....

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value of taxable services. Sub-section (1) thereof provides for a penalty on any service tax not paid or not levied or short-levied or short paid or erroneously refunded, by reason of fraud, collusion, willful mis-statement, suppression of facts or contravention of any of the provisions or the act and rules made with intent to evade payment of service tax. 4. In the present case, before the Tribunal as well as before us, it was contended that such penalty could not have been imposed in view of .....

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the entire Service Tax demand along with interest, was paid before the issue of show cause notice. It was also their case, that Service Tax required to be paid under reverse charge mechanism was admissible as Cenvat Credit to the appellant and accordingly there cannot be any intention to evade payment of Service Tax. In this regard, it is observed that the appellant was recovering the Service Tax from the services. Further, they were registered with the Central Excise Dept. for providing severa .....

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e Bench in case of Bhagwati Caterers Pvt Ltd V/s. CST, Ahmedabad (supra) as pointed out by the Learned Authorized Representative, appearing on behalf of the Revenue. Appellant has also not filed required periodical returns Revenue could detect none payment of Service Tax as a result of special investigation. It is not the case where the appellant was not registered with Central Excise Dept and could claim ignorance of law. By recovering the Service Tax from their service recipients and not payin .....

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with the Central Excise Department for providing several services including the service in question on which service tax was required to be paid on reverse charge basis. It was held that having collected such tax from the service recipients and having been registered in respect of such service, the assessee was required to pay service tax to the Excise Department. The assessee had not filed requisite periodical returns and the fact of non payment of service tax came to light of the Department on .....

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g noticed the admitted facts and having come to the conclusion regarding such element of mense rea, we do not find any question of law arising. 7. Section 80 of the Act provides that notwithstanding anything contained in section 76, section 77 or section 78, no penalty would be imposable when the assessee proves that there was reasonable cause for the failure to pay the tax. In the present case, assessee could not demonstrate the reasonable cause for not paying the tax. As noted by the Tribunal, .....

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wever, requires that when such service tax is paid before issuance of show cause notice, the officer shall not serve any notice under sub-Section (1) in respect of such amount. Explanation (2) of Sub-Section (3) of Section 73 provides that no penalty under any of the provisions of this Act or the rules would be imposed in respect of payment of service tax under the sub-section and interest thereon. However, Sub-Section (4) of Section 73 which is material for our purpose reads as under: (4) Nothi .....

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