TMI Blog2018 (8) TMI 825X X X X Extracts X X X X X X X X Extracts X X X X ..... y manipulated their accounts and paid lesser service tax even though they have recovered the entire portion of service tax from the client. The respondent cannot take shelter under a faulty programme when they themselves handled in the system. The service tax could not have been calculated on the basis of the amount received from the clients minus TDS. The respondent is liable to pay penalty. Section 80 of the Finance Act,1994, cannot be invoked - appeal allowed - decided in favor of Revenue. - C.M.A.No. 3174 of 2017 - - - Dated:- 10-8-2018 - S. Manikumar And Subramonium Prasad, JJ. For the Appellant : Mr.V.Sundereshwaran Senior Standing Counsel for CCEST For the Respondents : Mr.Raghavan Ramabadran for M/s.V.Lakshmi kumaran assisted by Mr.Swetagiridhar. JUDGMENT Subramonium Prasad, J. The instant appeal is directed against the final order No.41010 of 2016 dated 16.06.2016 passed by the Honourable Customs, Excise and Service Tax Appellate Tribunal, Chennai, whereby the Tribunal has set aside the order passed by the Appellate Authority penalty under Section 78 of the Finance Act, 1994, by invoking the provisions of Section 80 of the Finance Act, 1994. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and TDS. Only before finalizing Income Tax returns during the next financial year usually during October, we will consolidate the TDS certificates. Our Accounts Receivable team depending upon their workload will start issuing credit memos to the customers and account the same in our books of account. While accounting these credit memos if they attach service tax tag, the tax is getting remitted otherwise both positive and negative effect in remittance report will be reported. Hence, we could not categorically say that we have complied 100% on TDS credit memos. Thus we would like to reiterate that for some of the TDS we have remitted service tax and for some of the cases we have not remitted the service tax. Further all the TDS certificates do not attract service tax liability. At present, we do not have complete details of TDS on which service tax is payable. Question No. 10: As per Section 67 of the Finance Act, 1994 the taxable value is the gross amount charged for the services rendered and no abatement is available for TDS which is nothing but on account of your Income Tax. In such a case why you have not paid service tax on TDS withheld by your customers? Answer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the service tax on all such deductions for the reason that their personnel while giving credit to such deductions would have failed to attach the service tax tag to the transaction which then will go unrecognised by their accounting software. He also stated that they did not have the details of such instances where the service tax was not paid on the TDS. He further contented that the service tax is payable on realization of the value and that since the benefit of TDS account will accrue to the company only after the income tax department admits the TDS certificates and in case it is not admitted by IT Department they will have to forego the benefit and in which case they are not liable to service tax. Further all the TDS certificates will be received only after the closure of the financial year which will then be submitted to the income tax department only in the month of October every year and moreover the fate of the TDS will be known only after 2 years thence. For the above reasons they had not considered TDS while calculating the service tax each month based on the collection reports. That they require at least two months to furnish the required details in respect of the TDS. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 76 78 of the Finance Act, 1994. 9.Now, therefore, M/s.SIFY., Chennai-600 113, are hereby required to show cause to the Commissioner of Service Tax, Office of Commissioner of Service Tax, 'MHU Complex' 692, Anna Salai, Nandanam, Chennai 35 as to why:- a. The service tax of ₹ 1,44,40,336/- (Rupees One Crore forty four lakhs ten thousand three hundred and thirty six only) (Service Tax ₹ 1,41,74,369/- Education Cess ₹ 2,35,967/-) should not be demanded from them under the proviso to Section 73(1) of Finance Act, 1994; b. The interest on the Service tax and Education Cess payable by them should not be demanded from them under Section 75 of the Finance Act, 1994; c. a penalty should not be imposed on them under Sections 76 and 78 of Finance Act, 1994 for the alleged contravention. 6.The respondent gave a reply to the show cause contending that the short remittance was a result of wrong software programme and the shortfall in the remittance was not wilful para 4.4 to 4.9 of reply reads as under:- 4.4. While the aforesaid method ensure that all the accounting entries are captured, due to mistake in the legacy application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s be taken against the Noticee. 7. The adjudicating authority rejected the defence of the assessee and has observed as under:- 5.1. On examination of the facts and circumstances of the case, I am of the view that it is not a case of simple failure, but travels beyond that, as the assessee could have detected the mistake at the time of finalization of accounts or preparation of Income Tax return. A prudent businessman normally reconcile the receipts with the bill amount and as the deduction of TDS amount is a statutory one, it will not be considered as outstanding just because there is a delay in the receipt of TDS certificate. Even assuming that the TDS amount was shown as outstanding till the receipt of TDS certificate, they should have accounted the TDS amount as realized amount after the receipt of TDS certificate. It is not the case of the assessee that the TDS amounts are shown as outstanding permanently. Once the TDS certificates are received it is considered as realised amount and at least at that time the assessee should have paid the service tax. The fact of such non-inclusion of TDS amounts in the taxable value was not voluntarily disclosed by the asessee but wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Whether Hon'ble Tribunal is correct in granting waiver of penalty under Section 80 of Finance Act, 1994, without even recording its findings, on the reasons/grounds brought out in the Order-in-Original to arrive at the conclusion of wilful suppression and concealment of value of taxable services? 2. When the original authority has categorically held that there is a case of wilful suppression of value of taxable service and the plea of reasonable cause has been negated by the original authority and the same has not been challenged by the taxpaye, is it proper for CESTAT to hold that there was reason to exonerate the taxpayer from the penal provisions by invoking Section 80 of Finance Act, 1994? 11.The learned counsel appearing for the Revenue / appellant submits that Section 67 of the Finance Act, 1994, postulates that where the service is provided for consideration in money, service tax has to be paid on the gross amount charged by the service provider for such services provided or to be provided by him. According to the learned counsel for the Revenue, tax was paid only after the suppression was unearthed and since the service tax was paid only after the proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the value of taxable service in this clause shall not include in initial deposits made by the subscribers at the time of applications for telephone connections; (c)in relation to services of general insurance business provided to the policy holders shall be the total amount of the premium received by the insurer from the policy holders. Section 73:- 73. Value of taxable services escaping assessment..-- (a) the Central Excise Officer has reason to believe that by reason of omission or failure on the part of the assessee, to make a return under section 70 for any quarter or to disclose wholly or truly all material facts necessary for his assessment for any quarter, the value of taxable service for that quarter has escaped assessment or has been under-assessed, or (b) notwithstanding that there has been no omission or failure as men-tioned in clause (a) on the part of the assessee, the Central Excise Officer has, in consequence of information in his possession, reason to believe that the value of any taxable service assessable in any quarter has escaped assessment or has been under-assessed. he may, in cases falling under clause (a), at any time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the respondent to evade payment the service tax. The service tax has been paid only after the inspection and investigation by the department and full payment of service tax is not a mitigating circumstance, in the facts of the case. Violation of a statute in which there is no ambiguity and relying on the software programme as a reason for non payment of service tax in time cannot be a reasonable cause for the failure to pay tax, in time. 16. As stated above, as per Section 67 of the Finance Act, 1994, service tax is payable on the gross amount of value service rendered and service tax is payable once the amount billed is realized. But for the investigation, the non payment of service tax would have gone unnoticed. The amount received from the client would include the entire service tax which has been calculated from the customer and it should have been paid to the department. The TDS amount with held cannot be said to include the service tax component. Viewed in this angle the respondent has received the service tax and has not passed on it to the department. The invoice that is raised would contain the amount payable towards service Tax. For example if service provided for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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