TMI Blog2018 (4) TMI 1184X X X X Extracts X X X X X X X X Extracts X X X X ..... positive act on the part of the assesse with intent to evade payment of service tax - The Revenue has not given any positive evidence to evade payment of service tax. This is a situation of revenue neutrality and the service tax is not payable on reimbursement of expenses - penalty not imposable u/s 78 when the proceedings come to an end in section 73(3) of the Finance Act/ 1994. Appeal allowed - decided in favor of appellant. - ST/57570/2013 - 61631/2018 - Dated:- 13-3-2018 - Mr. Ashok Jindal, Member (Judicial) and Mr. Anil Gu Shakkarwar, Member (Technical) Shri.D.K. Rana, Advocate present for the Appellant(s): Shri.Atul Handa, AR present for the Respondent(s): Per: Ashok Jindal The appellant is in appeal against the impugned order imposing penalty under section 78 of the Finance Act, 1994. 2. The facts of the case are that M/S. Hindustan Petroleum Corporation Ltd (HPCL) incorporated Guru Gobind Singh Refineries in the year 2000 for setting up refinery at Bhatinda, Punjab. On account of some problems, the said project was closed down and could be re-started in June, 2008 after HPCL formed a Joint Venture with Mittal Energy Investment Pte Ld. Singap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being pointed without any protest and availed credit of service tax so paid. He further submits that the expenses incurred by the appellant for its subsidiary while subsidiary was in process in laying pipelines. Taxability of reimbursement of expenses from subsidiary without any mark was in doubt and was held to be non-taxable by the Hon'ble Delhi High Court in the case of Intercontinental Consultants Technocrats Pvt. Ltd.2013(29) STR 9 (Del.). Further expenses incurred by the appellants disclosed in the balance sheets which were publicly available. Moreover the appellant has deposited service tax with interest promptly on being pointed out without any protest. He submits that the department has not proved willful or any positive deliberate contumacious act on the part of the appellant to establish suppression with intent to evade payment of service tax to invoke the extended period of limitation. He further submits that the presumption of intentional evasion and therefore suppression in cases involving ordinary deviation or no disclosure is unwarranted and contrary to the settled legal position. Such proposition of intentional evasion would make provisions of section 73 (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant is also not contesting the demand of service tax and interest. The appellant is contesting only penalty imposed on the appellant under section 78 of the Finance Act, 1994. The contention of the appellant is that as on being pointed out, they have paid service tax alongwith interest/ therefore, as per provisions of section 73 (3), the proceedings should come to an end. It is also submitted by the learned Counsel for the appellant that as there was no intention to evade payment of service tax and whatever service tax is to be paid by the appellant, the same is entitled as credit to the appellant. In that circumstance, this is a situation of revenue neutrality. Therefore, the suppression is absent. We also take note of the fact that the demand of service tax sought to be confirmed against utilization of expenses received from the subsidiary without any mark up. The taxability of the said has been settled by the Hon'ble Delhi High Court in the case of Intercontinental Consultants Technocrats Pvt. Ltd. wherein the Hon'ble Delhi High Court has observed as under: 18. Section 66 levies service tax at a particular rate on the value of taxable services. Section 67(1) ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be laid before each House of Parliament would not confer validity on a rule if it is made not in conformity with Section 40 of the Act. Thus Section 94(4) does not add any greater force to the Rules than what they ordinarily have as species of subordinate legislation. 8. We find that expenditure cost cannot be considered the amount charged by service provider for the services provided by them, Therefore, on the amount reimbursed expenses from the subsidiary is not taxable. Moreover, whatever amount has to be paid by the appellant under reverse charge mechanism on import of services is available as input service credit to the appellant, therefore, it is revenue neutrality situation. 9. We further find that as the appellant has immediately paid the amount of service tax alongwith interest and the same intimated to the department and prayed not to take any coercive action. It shows that there was no positive act of suppression on the part of the appellant. We also take note of the fact that the learned AR relied on the decision of the Tribunal in the case of Care and Cure Pvt. Ltd. (supra) to show that if the service tax was paid before issuance of show cause notice, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available on records indicate that the appellant had no intention to suppress any information or withhold any information from the department with an intention to evade payment of service tax. In any case the appellant was eligible for Cenvat credit of service tax paid and there was no need for him to evade any payment of tax. In these facts and circumstances, the decision of the Tribunal in the case of Essar Ltd., cited supra squarely applies. Accordingly, we are of the view that the penalty is not imposable on the appellant under the provisions of Sections 77 78 of the Finance Act, 1994/ in view of Section 73(3) of the Finance Act, 1994 read with Section 80. Accordingly, we allow the appeal. The appellant has not disputed service tax and interest liability and therefore, the appropriation of the same by the adjudicating authority is upheld 10.We further find in the case of Endeka Ceramics India Pvt. Ltd. (supra) wherein the facts are as under: During the course of visit of the jurisdictional Assistant Commissioner, it was noticed that the some foreign engineers were available in the unit and providing the Engineering/Testing Consultancy in setting up of machinery instal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d no show cause notice should have been issued, Further we also find that this is a case where appellants have been able to show reasonable cause for non-payment of the tax even if it is assumed that there was delay in payment in view of the revenue-neutral situation and lack of availability of qualified staff. In view of the above, we find that the penalty imposed on the appellant cannot be sustained and has to be set aside, In the result the amount paid towards Service Tax and interest thereon demanded and appropriated is sustained and penalties imposed on the appellant are set aside. 11. We further find that in the case of Pushpam Pharmaceuticals Co. (supra), the Apex Court came across to define suppression, The apex court has observed as under: 4.Section 11A empowers the Department to re-open proceedings if the levy has been short-levied or not levied within six months from the relevant date. But the proviso carves out an exception and permits the authority to exercise this power within five years from the relevant date in the circumstances mentioned in the proviso, one of it being suppression of facts. The meaning of the word both in law and even otherwise is well know ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exempted goods were not required to be included and these did not include the value of the exempted goods which they manufactured at the relevant time. The Tribunal found that the explanation was plausible, and also noted that the Department had full knowledge of the facts about manufacture of all the goods manufactured by the respondent when the declaration was filed by the respondent. The respondent did not include the value of the product other than those falling under Tariff Item 14E manufactured by the respondent and this was in the knowl edge, according to the Tribunal, of the authorities. These findings of the Tribunal have not been challenged before us or before the Tribunal itself as being based on no evidence. 13.Further in the case of Uniworth Textiles Ltd. (supra), the Apex Court has observed as under: 12. We have heard both sides, Mr. R.P. Bhatt, learned senior counsel, appearing on behalf of the appellant, and Mr. Mukul Gupta, learned senior counsel appearing on behalf of the Revenue. We are not convinced by the reasoning of the Tribunal. The conclusion that mere non-payment of duties is equivalent to collusion or willful misstatement or suppression of facts i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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