2014 (12) TMI 461 - AT - Service Tax

Invocation of extended period of limitation - Whether extended period can be invoked in a case where penalty imposition under Section 78 has been waived as per Section 80 of the Finance Act, 1994 - Held that - Even in the case of where Section 78 is invokable and established the penalty imposed upon an assessee can be set-aside under Section 80 of the Finance Act, 1994 in case it can be proved by an assessee that there was a reasonable cause for failure. Therefore, it can be independently examined whether extended period can be invoked, where waiver of Section 78 penalty upon the appellant is allowed as per the provisions of Section 80 of Finance Act, 1994. The case of Gujarat High Court in the case of Ankleshwar Taluka ONGC Land Loosers Travellers Co.Op vs. CCE, Surat (2012 (4) TMI 326 - GUJARAT HIGH COURT) relied upon by appellant was different on facts. There was a written contract between M/s. ONGC and that appellant having no service tax clause. M/s. ONGC refused to pay tax to the appellant in that case. It was specifically brought to the notice of High Court that in those circumstances the service tax could not be deposited in time. In the present case before this bench, no written contract is produced to indicate that service tax clause was not there. There is also no indication that M/s. Gujarat Borosil Limited refused to pay service tax to the appellant. There is also no evidence that appellant had any confusion that service tax payment on Rent-a-Cab services was disputable. In the present case the entire demand is not time barred and appellant has not shown his bonafides by paying the service tax along with interest for the period within limitation period. Appellant is not able to convince the Bench, with any documentary evidence that there was any confusion in his mind regarding non payment of service tax. Extended period is applicable in the present appeal even if waiver from Section 78 penalty has been extended to the appellant under Section 80 of the Finance Act, 1994. - Decided against assessee.

Summary

Issues:
Whether extended period can be invoked when penalty imposition under Section 78 is waived as per Section 80 of the Finance Act, 1994.

Analysis:
The appellant filed an appeal against the order dated 27.5.2013 passed by the Commissioner (Appeals), Surat-II, regarding a demand related to Rent-a-Cab services provided to M/s. Gujarat Borosil Limited. The Adjudicating authority confirmed the demand, interest, and penalties, which were later reduced in a subsequent order dated 12.01.2012. The first appellate authority upheld the tax demand and interest but allowed the appeal on penalties under Section 80 of the Finance Act, 1994. The main contention raised by the appellant was that the demand was time-barred due to confusion regarding service tax provisions during the relevant period.

The appellant relied on various case laws to support the argument that once Section 80 benefit is granted, the extended period cannot be invoked. On the other hand, the Revenue argued that even after granting Section 80 benefit, the extended period could still be applicable based on specific circumstances. The conflicting judgments presented by both sides raised the question of whether the extended period can be invoked when penalties under Section 78 are waived under Section 80.

The Tribunal considered the conflicting judgments and analyzed the provisions of Section 80 of the Finance Act, 1994. The Tribunal referred to the judgment of the Allahabad High Court in the case of Daurala Organics vs. CCE, which highlighted that the benefit of Section 80 can be granted even if the extended period is invokable. The Court emphasized that the non obstante provision of Section 80 overrides Section 78, allowing the assessee to prove reasonable cause for failure, even if penalties are imposed under Section 78.

Based on the above analysis, the Tribunal concluded that the extended period can be invoked in the present appeal, even if the penalties under Section 78 were waived for the appellant under Section 80 of the Finance Act, 1994. The Tribunal found that the appellant failed to demonstrate any confusion or reasonable cause for non-payment of service tax on Rent-a-Cab services, leading to the rejection of the appeal.

In summary, the Tribunal's decision upheld the applicability of the extended period despite the waiver of penalties under Section 78 for the appellant under Section 80 of the Finance Act, 1994. The judgment emphasized the importance of proving reasonable cause for failure and highlighted the non obstante provision of Section 80 in overriding Section 78 in certain circumstances.