TMI Blog2017 (4) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... period - penalty set aside. Penalty u/s 73(4A) and Section 77 - Held that: - Since the appellant has not filed proper returns and had not taken registration for the said service, appellant is liable to pay penalty u/s 77 - Since the appellant has paid service tax along with interest before issuance of SCN, Section 73(3) would apply and therefore the penalty imposed u/s 73(4A) is set aside. Appeal disposed off - decided partly in favor of assessee. - ST/21600 & 22742/2014 - A/30435-30436/2017 - Dated:- 8-3-2017 - Ms. Sulekha Beevi, C.S., Member(Judicial) Sh. R. Muralidhar, Advocate for the Appellant Sh. Nagraj Naik, Deputy Commissioner (AR) for the Respondent ORDER [Order Per Sulekha Beevi, C.S.] The issue involved in above two appeals being the same they were heard together and are disposed by this common order. The parties are referred to as assessee and Department for the sake of convenience. 2. The assessee is registered with the Service Tax Department under the category of GTA services, Scientific and Technical Consultancy services. They had utilised the services of a foreign service provider for management and maintenance service during th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that assessee is liable to pay service tax under reverse charge mechanism on the payments made to the foreign service provider in regard to Management, Maintenance or Repair services. That the assessee had immediately paid the amount as pointed out by the audit along with interest. That therefore no show cause notice ought to have been issued to the appellant in terms of sub-Section (3) of Section 73 of the Finance Act, 1994. That the show cause notice has been issued after about four months invoking the extended period alleging suppression of facts. ii) It was argued by the Ld. Counsel that the assessee did not discharge the service tax on the said services only on the bonafide belief that these services were not taxable and therefore is not guilty of suppression of facts. The issue whether assessee is liable to pay service tax on payments made to foreign service provider under Section 66A was contentious during the relevant period. The same was settled by the decision in the case of Indian National Shipowners Association Vs. Union of India [2009 (13) STR 235 (Bom.)]. iii) That apart from the allegation that assessee had not taken registration in respect of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax along with interest prior to the issuance of Show Cause Notice as the assessee has suppressed the figures in their returns they are guilty of suppression of facts. The Commissioner (Appeals) ought to have imposed penalty under Section 78 of the Finance Act. The provisions under Section 73(4A) have been wrongly applied by the Commissioner (Appeals). It is also submitted by him that Commissioner (Appeals) has erred in setting aside penalty imposed under Section 77. As the assessee has not taken registration nor disclosed the figures in respect of impugned services in the returns there is clear violation of the provisions of Finance Act, 1994 and therefore penalty under Section 77 is attracted. 6. I have heard the submissions made before me. It is not disputed that the appellant has discharged the entire service tax liability immediately on being pointed out by the audit party. Sub-section (4A) to Section 73 was introduced w.e.f. 08.04.2011. At that time, the non-obstante the not obstante clause in Section 73(4A) mentioned both sub-Sections (3) and (4). Later by amendment brought forth on 28.04.2012 the sub-Sections (3) (4) were substitued with sub-Section (4) only. Thereby ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax shall be deemed to have been concluded. 9. The Commissioner (Appeals) thus imposed penalty under Section 73(4A). In para 5c of impugned order the finding recorded by Commissioner (Appeals) is that short levy was detected by the audit and that assessee maintained true and complete details of transaction. Therefore, he set aside the penalty imposed by adjudicating authority under Section 78. 10. The Department has filed appeal against the order passed setting aside penalty under Section 78. The issue whether service tax is payable under Section 66A under reverse charge mechanism was contentious during the relevant period and was later settled by the judgment in the case of Indian National Shipowners Association (supra) . The Co-ordinate Bench of Tribunal in the case of Tech Mahindra Ltd., (supra) had occasion to analyze a similar legal situation and observed that as the said issue was contentions the benefit of doubt could be extended to the appellant for non-disclosing such amount in their ST-3 returns and thereby waived the penalties imposed under Sections 76, 77 and 78 by giving the benefit of Section 80 of the Finance Act, 1994. Similar view was taken in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed duration the non obstante clause in Section 73(4A) included both sub-Section (3) as well as sub-Section (4). As this was overlapping and conflicting with Section 73(3), the legislature in its wisdom has brought forth the amendment w.e.f. 28.04.2012 deleting sub-Section (3) from non obstante clause in Section 73(4A). Since the appellant has paid service tax along with interest before issuance of show cause notice Section 73(3) would apply and therefore the penalty imposed under Section 73(4A) is set aside. 13. The Commissioner (Appeals) has set aside the penalty under Section 77 also. Since the appellant has not filed proper returns and had not taken registration for the said service, I consider that appellant is liable to pay penalty under Section 77. The penalty imposed by adjudicating authority under Section 77 is restored. The impugned order is modified to the extent of setting aside the penalty imposed under Section 73(4A) and restoring the penalty imposed by the adjudicating authority under Section 77. The appeal filed by the assessee is partly allowed and the appeal filed by the Department is also partly allowed in above terms with consequential reliefs, if any. (Ord ..... X X X X Extracts X X X X X X X X Extracts X X X X
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