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C. Ramachandran Versus Commissioner of Service Tax, Chennai

Levy of penalty - Valuation - service tax liability on TDS amount and reimbursements received towards LPG gas and Milk from the recipient of services - Outdoor Catering Service - reimbursement of expenditure - Held that:- the disputed tax and interest have already been paid (excess tax paid as claimed by the Appellant), the issue to be addressed in this appeal is the imposition of penalty under Section 76, Section 78 of the Finance Act, 1994 and adjustment of excess tax paid by the Appellant. - .....

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e to imposition of penalties under Section 76 and Section 78 of the Finance Act, 1994. - Decided partly in favor of assessee. - Appeal No. ST/282/2010 - Final Order No. 41224/2016 - Dated:- 13-7-2016 - Shri P.K. Choudhary, Judicial Member And Shri C.J. Mathew, Technical Member For the Appellant : Shri T.R.Ramesh, Advocate For the Respondent : Shri A. Cletus, ADC ( A.R ) ORDER Per P. K. Choudhary The issue involved in the appeal relates to waiver of penalty under Section 76 invoking Section 73 (3 .....

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for routine audit between 28.10.2008 and 12.11.2008 and it was noticed non-payment of Service Tax for the period January 2008 to September 2008. It was also noticed by the Audit Team that appellant had not discharged the service tax liability on TDS amount and reimbursements received towards LPG gas and Milk from the recipient of services, to the tune of ₹ 8,07,252/-. Proceedings initiated culminated in the impugned order. Hence the present appeal. 3. The learned Advocate appearing for th .....

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ation is also recorded in the impugned order. This clearly demonstrates that there was no mala fide intention on the part of the appellant warranting invocation of extended period. 3.1 With regard to non-payment of service tax on TDS quantum, he submits that appellant was under bonafide belief that the liability was being worked out based on the invoice value and there was no question of adding TDS again, which will result in double accounting of the same figure since the invoiced amount include .....

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a pure agent of the recipient of services, which are not includible in the value in terms of Rule 5(2) of Service Tax (Determination of Value) Rules, 2006. Any Service Tax collected forcefully on the erroneous interpretation needs to be refunded to the Appellant. Further, the demand on this score is barred by limitation in the absence of any active suppression especially when the matter involves interpretation besides availability of set-off credit at the recipient end making the situation reve .....

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to Sec.73(1) of the Finance Act, 1994. This submission is further corroborated by the fact that there is no clandestine operation, in any manner, by the Appellant, which is evident from the fact that all transactions were invoiced and all payments were received only by Cheque through Bank and there was no cash transaction between the recipient of the service and the Appellant. 3.4 Further, most of the recipients of service are eligible to avail input credit of the tax paid on invoices raised by .....

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n 73 (3), he relied on the judgement of Hon'ble Karnataka High Court in the case of CCE & ST., LTU Bangalore Vs Adecco Flexione Workforce Solutions Ltd. 2012 (26) STR 3 (Kar.). 3.5 He submits that in the matter of interpretation as to whether the reimbursement of amount towards gas and milk would be excludible under Rule 5(2) of Service Tax (Determination of Value) Rules, 2006 and would not warrant invocation of extended period of time limit, which proposition is well settled. Consequent .....

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y in nature and hence it can be made applicable both prospective and retrospective. On this submission, he drew our attention to para-8 of the judgement of Hon'ble Madras High Court in the case of Tamil Nadu Small Indus. Corpn. Ltd. Vs CCE Chennai 2009 (234) ELT 413 (Mad.). 3.8 The appellant has paid the service tax and interest before issue of SCN which can be seen from the worksheet submitted by them in the paper book, duly certified by the Chartered Accountant. In fact, there is an excess .....

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ted above and under the circumstances of the case. 4.0 Inasmuch as the whole demand with interest is paid, imposition of penlaty of ₹ 8,10,000/- is unsustainable since there was no mala fide intention on the part of the appellant warranting imposition of penalties, as both the penalty under Section 76 and Section 78 are mutually exclusive and this submission has not been considered. Levy of tax on LPG and milk reimbursements which are not taxable under Rule 5(2) of Service Tax (Determinati .....

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oss value of service since the appellant has received money against the cost of the LPG and milk and should have included the same in their taxable value. Failure to do so, it establishes element of suppression. Accordingly, benefit of Section 80 cannot be given. He further submits that penalty is imposed under Section 76 and 78 under two different heads and they cannot be mixed here. 5. We have carefully gone through the records and submissions. We find that the disputed tax and interest have a .....

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h flow problems faced by the Appellant. While we are of the view that financial hardship is not a ground for non-payment of taxes, we find that the said amounts have already been disclosed in the ST-3 returns and that the tax along with interest has already been deposited during the course of audit and before the issuance of Show cause notice. In this regard, we find that the provisions of Section 73(3) of the Finance Act, 1994 is applicable to the facts of the present case. Section 73(3) of the .....

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or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid : .... ..... ..... ..... We also find that an explanation was inserted to Section 73(3) of the Finance Act, 1994 which is reproduced below: Explanation 2. For the remo .....

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e. Applying the analogy to the facts of the present case, we are of the view that the amendment vide Explanation to Section 73(3) is retrospective in nature as the said amendment has declared that no penalty shall be applicable in case the tax and interest is being paid even before the issuance of Show cause notice . Accordingly penalty u/s. 76 of the Finance Act, 1994 is liable to be set aside. 7. As regards imposition of penalty u/s. 78 of the Finance Act, 1994, we find that the Learned Commis .....

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