TMI Blog2018 (2) TMI 1845X X X X Extracts X X X X X X X X Extracts X X X X ..... n which the applicant was claiming the exemption and therefore, for the period from 1-3-2013 to 7-5-2013, they are duly eligible for claiming the exemption of 75% of the value and taxable amount would be 25%. Since during the period from 1-3-2013 to 7-5-2013, the exemption of 75% was given to residential units having carpet area less than 2000 sq. ft. or where even consideration is less than one crore and since the consideration received was less than one crore in the case of the applicant during the period from 1-3-2013 to 7-5-2013, the exemption notification is applicable to them and they have to pay tax on 25% of the amount charged. Accordingly, ₹ 37,391 demanded by the Department does not sustain. Penalty - Held that:- The applicant has completely co-operated with the Department during the period of audit and accepted the non-paid amount which was apparently a result of non-comprehension of technicalities relating to reverse charge mechanism. The applicant has also co-operated with the Commission while pleading his case and the Commission is of the view that the applicant has made a full disclosure of his taxable amount and paid the tax immediately on detection with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 11,60,980/-(ST-Rs. 11,25,224/-, E. Cess ₹ 22,504/- and SHE Cess ₹ 11,253/-) already paid by the noticee should not be appropriated. (ii) Interest at appropriate rate under Section 75 of the Finance Act, 1994 should not be demanded. (iii) Penalty under Section 78 of the Act for wilful suppression of facts and contravention of the provisions of Chapter V of the Act and rules made thereunder with intent to evade payment of Service Tax. (iv) Penalty should not be imposed under Section 77 of the Finance Act, 1994 for non-payment of Service Tax in time and in contravention of Sections 66 and 68 of Act read with Rule 6 of the Service Tax Rules, 1994. 2.1 In the application for settlement dated 15-2-2017 (received in this office on 24-3-2011 being transferred from Principal Bench), the applicant has admitted liability of ₹ 11,73,019/- (incl. Cess) out of the rupees 12,13,407/- (ST-Rs. 11,78,066/-, E. Cess ₹ 23,561/- and SHE Cess ₹ 11,781/-) demanded in the SCN along with interest payable thereon. 2.2 Before approaching the Commission the applicant deposited ₹ 11,73,019/- (incl. Cess) as the admitted amount along with interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per Sec. 78 of the Finance Act, 1994, benefit of reduced penalty of 15% of the demand within 30 days of receipt of the notice was legally available to the applicant which they did not take. Hence the application is only to cover up their lapses. In view of the above, they opined that the applicant may not get immunity from penalty. Also, the payment made by the applicant is not a case of spot recovery but are the efforts made by the deptt. 4.2 The applicant vide letter dated 3-5-2017 was asked to comment on the Commissioner s report. The applicant vide reply dated 18-5-2017 informed that :- They have made the payment of Service Tax demanded and interest thereon as per the demand raised by the deptt., during Audit conducted on 8-2-2014 and 11-2-2014. The detailed calculation of interest has been shown in the audit report provided by the deptt. and is enclosed along with. However, in the above report, the applicant have denied demand and accordingly payment of ₹ 40,388/- (Rs. 12,13,407/- - ₹ 11,73,019/-) and interest thereon under the head Construction of Residential Complex due to the reasons mentioned in their Settlement Application and [overridden] ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a lapse in computation of tax liability under RCM as the law relating to that was newly introduced during the impugned period and the company was unaware of the modus operandi of the RCM. Hence this is only a procedural lapse. Regarding imposition of penalty the applicant submits that only a failure to discharge tax liability does not tantamount to evasion of S. Tax and penalty u/s. 78 cannot be imposed. In support of his claim the applicant has cited the following cases :- a. Uniworth Textiles v. CCE, Raipur [2013 (288) E.L.T. 161 (S.C.)] b. Union of India v. Ashok Kumar [(2005) 8 SCC 760] c. Continental Foundation Jt. Venture v. CCE, Chandigarh-I [2007 (216) E.L.T. 177 (S.C.)] d. CCE, Aurangabad v. Bajaj Auto Ltd. [2010 (260) E.L.T. 17 (S.C.)] e. New Decent Footware Industries v. Union of India [2002 (150) E.L.T. (Del.)] 4.4. Further, vide their letter dated 18-8-2017 the respondent submitted that :- Out of the balance amount of ₹ 40,388 as mentioned above, the applicant paid S. Tax of ₹ 2,997 and interest of ₹ 2,920 vide Challan No. 000515, dated 24-7-2017. As the S. Tax liability and interest has alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) That from 8-5-2013, the term or was substituted by and therefore having units more than 2000 Sq. Ft. They were ineligible of the 75% exemption. (iii) That there was a mistake in calculation of Service tax as the applicant was unaware of the modus operendi of reverse charge mechanism. The applicant had made true and full disclosure and also co-opreated with the department during audit and therefore immunity from penalty and prosecution may be granted to them. (iv) That a further written submission will be made within 5/6 days. 5.2 The Department was represented by Shri K.L. Agarwal, Superintendent, Range-V, Div-1, Raipur CGST CX Commissionerate, who submitted that the Audit had worked out Service tax liability on 30% of gross receipt up to 7-5-2013 in terms of Notification No. 2/2013. Therefore a difference of ₹ 40,388 arises. He also confirmed the deposition of ₹ 2,997 towards duty along with ₹ 2,920 interest by the applicant towards their duty liability. 5.3 The applicant submitted additional submissions on 22-1-2018 namely :- The taxability (exemption) of the construction of residential complex was initially been given in Notifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,73,019/- paid earlier. The applicant did not dispute the demand except for certain amount in respect of the demand of short payment under residential complex service. Out of the total demand of ₹ 92,815/- under residential complex service, ₹ 40,388 was disputed and the rest was paid. At a later stage, they only disputed ₹ 37,391 and paid ₹ 2,997/-. Thus, the total disputed amount was ₹ 37,391. The applicant contended that during the period from 1-3-2013 to 7-5-2013, they were eligible for claiming exemption of 75% of the amount charged and the taxable amount would be on 25% of the value in terms of [Notification] No. 2/2013-S.T., dated 1-3-2013, whereas Department had calculated tax on 30% of the taxable value. 6.2 The additional submission of the applicant claiming the above benefit on 22-1-2018 is at para-3 of the order supra. The Commission has gone through the Notification No. 2/2013-S.T., dated 1-3-2013 which was amended by Notification No. 9/2013-S.T., dated 8-5-2013. During the period from 1-3-2013 to 7-5-2013, this notification was applicable. As per the said notification, the Service Tax is to be levied on certain percentage of the value ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve amount of Service Tax and interest have been confirmed by the Department. Thus, the additional Service Tax liability is settled at ₹ 11,76,016. This amount having been paid by the applicant, no further payment is warranted. Similarly, the interest liability is settled at ₹ 2,37,917. And the applicant having paid this amount, no further payment is required. 6.7 The applicant has submitted that there was a mistake in computing the Service Tax liability under the Reverse Charge Mechanism as the company was unaware of the modus operandi of the Reverse Charge Mechanism; that the applicant has made a full and true disclosure and also co-operated with the Department during audit and provided all documents and information; it has also been noticed that the applicant has settled most of the unpaid Service Tax amount before issue of the SCN. The applicant has pleaded for immunity from penalty and prosecution. The Commission has noted that upon detection of the irregularity in payment, the applicant has accepted the liability and made the entire payment, except a small amount of only ₹ 37,391 which was subsequently found and agreed by the Commission that it was not dem ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
