SERVICE TAX
RECENT CASE LAWS
H.M. Singh & Co. Vs. Commissioner of Central Excise, Customs & Service Tax [2014 (49) taxmann.com 417(Allahabad)]
H.M. Singh & Co. (“the Appellant”) was served a Show Cause Notice dated September 29, 2010 by the Department demanding Service tax on the ground that during the period from April 2005 to March 2010, the Appellant had received Provident Funds payments relating to manpower supplied by it to the Hindalco Industries Limited, Renukoot (“service recipient”) and had not included the same in the assessable value for the purpose of calculation of Service tax.
The Appellant made payment of Service tax along with interest during June 2011 to October 2011. Thereafter, the Department passed an adjudicating order dated November 24, 2011 and levied penalty under Sections 77 and 78 of the Finance Act, 1994 [“the Finance Act”] (with option to pay 25% penalty within 30 days) which was further upheld by the Ld. Commissioner (Appeals) and the Hon’ble Tribunal.
Being aggrieved, the Appellant preferred an appeal before the Hon’ble High Court of Allahabad contesting the amount of penalty on the following ground:
· There was no case of fraud, collusion, wilful misstatement or suppression of facts within the meaning of Section 78 of the Finance Act or of a contravention with intent to evade payment of Service tax.
· The Appellant’s bona fide intentions are well established from the fact that the alleged amount of Service tax with interest was deposited without waiting for an order of adjudication.
· Nearly two-hundred notices had been issued by the division and Commissionerates at Allahabad on same issue which indicates that there was mass unawareness among the service providers in the stated area which was also noted in an order of the Joint Commissioner (Adjudication), Central Excise, Allahabad dated June 16, 2011.
It was held by the Hon’ble High Court of Allahabad that the Appellant’s conduct in paying Service tax even prior to adjudication was relevant factor depicting bona fide intentions of the Appellant.
Further, since there was mass unawareness on the issue involved, as even noted by Department itself, there was no case of fraud, collusion, willful misstatement or suppression of facts within the meaning of Section 78 of the Finance Act or of a contravention with intent to evade payment of Service tax.
Hence, penalty could not be levied.
Small Service Provider benefit cannot be denied on the ground that the Assessee has not opted for the same
Subin Telecom Vs. Commissioner of C. EX., Rajkot [2014 (10) TMI 133 - CESTAT AHMEDABAD]
Subin Telecom (“the Assessee”) is engaged in providing services as authorized distributor of products of Vodafone Essar Gujarat Ltd. (“Vodafone”) on commission basis since April 2007.
Even though the Assessee took registration under Service tax for ‘Business Auxiliary Service’ on April 26, 2007, they neither paid Service tax nor did they file any return. As soon as the Assessee came to know that the Department has collected the details of distributors from Vodafone, they made payment of Service tax with interest on February 8, 2008. On February 11, 2008, a letter from jurisdictional Central Excise authority was received by the Assessee requiring him to file return and produce records of books of accounts etc., for verification.
Thereafter, proceedings were initiated against the Assessee which culminated into impugned Order-in-Appeals, wherein the demand of Service tax was reduced from Rs. 2,24,106/- to Rs. 1,23,236/- by extending the benefit of erstwhile Small Service Provider Exemption Notification No. 6/2005-ST dated March 1, 2005 (“the SSI Exemption Notification”). Further, penalty imposed under Section 78 of Finance Act, 1994 (“the Finance Act”) were upheld, while the penalties under Section 76 and 77 of the Finance Act were set aside. Against the said order, the Assessee filed an appeal before the Hon’ble CESTAT, Ahmedabad against imposition of penalty under Section 78 of Finance Act and at the same time, the Revenue preferred an appeal against extension of benefit of the SSI Exemption Notification. The Revenue relied upon the decision in the case of L.G. Marwadi Vs. CCE, Pune-III [2010 (19) S.T.R. 279 (Tri.- Mumbai)] (“L.G. Marwadi case”) to submit that SSI benefit cannot be extended when the Assessee has not opted for the same.
The Hon’ble CESTAT, Ahmedabad held that when the Service tax was paid along with interest even before formal letter of the Department, penalty under Section 78 of the Finance Act is not sustainable.
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