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2016 (12) TMI 396 - CESTAT MUMBAI

2016 (12) TMI 396 - CESTAT MUMBAI - TMI - Imposition of penalty u/s 78 of the Finance Act, 1994 - the amount of service tax collected wrongly but not deposited with the government - after being pointed out by the department, same was deposited with interest - Held that:- The said amount collected by appellant does not fall under any of the category of the services that are taxed as at the most the said collection of amount by appellant for permitting to use the road can be under rent/lease of op .....

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ant has collected an amount which is representing service tax. In view of this, the provision of Section 78 would not apply in the case in hand. - Similar issue fell for consideration by the Hon'ble High Court of Punjab & Haryana in the case of Ajay Kumar Gupta [2015 (5) TMI 566 - PUNJAB & HARYANA HIGH COURT] wherein the Lordships 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 ha .....

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inted with the interpretation of the statute due to which 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. - Penalty u/s 78 set aside - appeal allowed - decided in favor of appellant-assessee. - Appeal No.ST/245/12 - ORDER NO.A/93649/16/STB - Dated:- 4-11-2016 - Mr. M.V. Ravindran, Member (Judicial) And .....

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but failed to pay the same to the Central Government. On being pointed out the appellant paid the service tax collected along with interest. Show-cause notice dated 01.04.2010 was issued for imposition of penalty on appellant. Appellant contested the show-cause notice on merits. After following due process of law, adjudicating authority confirmed the views expressed in the show-cause notice and imposed penalty under Section 78 of the Finance Act, 1994 after appropriating the amount paid by appel .....

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ce tax with interest thereof but no penalty provisions can be invoked. He would draw our attention to Section 78 of the Finance Act, 1994, and submit, that the said Section can be invoked for imposition of penalty only if the demands are confirmed under Section 73 of the Finance Act, 1994. After making this submission he would draw our attention to the facts of this case and submit that appellant had constructed road within their property which was used by M/s Indorama Cements for movement of me .....

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be imposed on the appellant. He would submit that identical issue came up before Hon'ble High Court of Punjab and Haryana in the case of Ajay Kumar Gupta - 2015 (39) STR 736 (P&H) wherein the Hon ble High Court set aside the Tribunal s order which upheld the penalty imposed under Section 78 of the Finance Act, 1994. 4. Learned D.R. reiterated the findings of the lower authorities. 5. On careful consideration of the submissions made by both sides and perusal of the records, we find that .....

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ted that appellant had collected the service tax liability from them under the impression that the said amount is taxable. Be that as it may, appellant had discharged the amount so collected along with interest on being pointed by the authorities. 5.1 The question now arises is whether the penalty imposed by the lower authorities on appellant under Section 78 of Finance Act, 1994, is sustainable or otherwise. 5.2 In our considered view the said penalty is not sustainable for more than one reason .....

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iability on the amounts received on leasing of open spaces is itself in question. 5.4 Secondly, the provisions of Section 78 of the Finance Act, 1994 does not envisage any penalty on the amount collected as service tax and not paid to the Government treasury covered under Section 73A of the Finance Act, 1994. In the case in hand none of the provisions of the Section 73A of the Finance Act, 1994 are applicable, as appellant has collected an amount which is representing service tax. In view of thi .....

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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 taxable services as may be notified] by the Central Government in the Official Gazette, the Service Tax thereon shall be paid by such person and in such manner as may be prescribed at the rate specified in Section 66B and all the provisions of this .....

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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 amount which was not required to be collected from any other person, such person shall forthwith pay the amount so collected to the credit of the Central Government. Section 73A(2) reads as under : 73A(2) Where any person who has collected any amount, which .....

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de 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] for every day during which such failure continues or at the rate of [one per cent] of such tax, per month, whichever is higher, starting with the first day after the due date till the date of actual payment of the outstanding amount of Service Tax : Provided that the to .....

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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 or wilful misstatement or suppression of facts and contravention of the provisions of the Chapter or of the Rules with intent to evade payment of Service Tax. Section 78 reads as under : 78. Penalty for suppressing, etc., of value of taxable services. - (1) Where any Service .....

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dition 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 true and complete details of the transactions are available in the specified records, penalty shall be reduced to fifty per cent of the Service Tax so not levied or paid or short-levied or short-paid or erroneously refunded : Provided further that where such Service Tax and the .....

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: 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 thirty days shall be extended to ninety days. (2) Where the Service Tax determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, as the case may be, the Court, then, for the purposes of this section, the Service Tax as reduced .....

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