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2016 (3) TMI 485 - BOMBAY HIGH COURT

2016 (3) TMI 485 - BOMBAY HIGH COURT - 2016 (42) S.T.R. 244 (Bom.) - Validity of Tribunal's order waiving the penalty - Scope of section 80 w.e.f. 14-5-2015 - Penalty imposed under Section 78 of the Finance Act, 1994 - Failure to pay Service tax - Service tax was not leviable at the time of execution of agreement but subsequently leviable during the time of subsistence and implementation of contract - Held that:- the Tribunal omitted from considering the fact that though the contract was execute .....

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penalty and specifically with the aid of Section 80 of the Finance Act, 1994 which was on the statute book till its amendment by Finance Act, 2015 with effect from 14 May 2015, is the question which has not been examined by the Tribunal at all. There is rather no reference to Section 80 of the Finance Act, 1994. As the Tribunal's order is cryptic and the reasons are wholly unsatisfactory, needs to be quashed and set aside. - matter restored before tribunal - Decided in favour of the revenue - .....

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passed on 3 January 2015, the Tribunal allowed the assessee's appeal and set aside the penalty imposed under Section 78 of the Finance Act, 1994. 2. The appeal before the Tribunal was directed only against that part of the order of Commissioner (appeals) where he sustained the penalty under Section 78 of the Finance Act, 1994 and upheld the imposition thereof. 3. The argument of the assessee was that it was constructing the factory for a cooperative spinning mill by virtue of an agreement of .....

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t inspected the premises of the assessee in 2007, they would not have discovered the evasion of service tax. Once the service tax was leviable during the course of implementation of the contract, then, the obligation to pay the same was absolute. There is no question of then contending that there was a bona fide impression of the assessee about the levy not being attracted or any doubt, whether the contract attracted the service tax liability or not. That is how the show cause notice was issued; .....

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n July 2007 should have alerted the assessee to make the further payments; but had the inspection not been carried out by the Revenue, the further payments would not have been forthcoming. It is in these circumstances, he confirmed the penalty under Sections 77 and 78 but set aside penalty under Section 76 of the Finance Act, 1994. 5. The Tribunal set aside eventually all penalties. Mr.Jetly appearing for the Revenue by inviting our attention to paragraphs 2 to 4 of the Tribunal's order, wou .....

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r contravention of any of the provisions of the Act or rules made thereunder with a view to evade payment of service tax, then, penalty was mandatorily leviable. There was no reason for the Tribunal, therefore, to have granted any relief and on a specious ground that the assessee entertained a bona fide belief that it does not fall under the service tax law. The liability was discharged as soon as non payment was brought to the notice of the assessee. 6. Mr.Jetly would submit that this sort of r .....

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ibunal is perverse. The Tribunal has found that there was enough power and discretion to set aside the penalty and the conduct of the assessee was, therefore, a very relevant factor. The learned advocate for the Respondent-assessee would, therefore, submit that the appeal be dismissed. 8. Having perused the impugned order passed by the Tribunal, we find that the reasons that are assigned by the Tribunal are in paragraph 4. That paragraph reads as under : "4. Having considered the rival subm .....

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llowed in part." While assigning said reasons the Tribunal omitted from consideration the fact that though the contract was executed prior to 10 September 2004, the same was a continuing contract and obligation. The work continued. The Tribunal omitted the fact that there was an inspection of the premises in the year 2007 and that is how the assessee was called upon to pay the tax which was not paid till then. After that, an orderinoriginal was about to be passed on a show cause notice, but .....

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