2014 (12) TMI 912 - AT - Service Tax

Penalty u/s 76 & 78 - Non receipt of service tax from ICICI - Held that - Appellant is providing services relating to granting of loans for and on behalf of ICICI Bank - In view of the above charging of appellant s activities to service tax under Business Auxiliary Services was prone to different interpretations. Under the circumstances, once the entire amount of service tax along with interest was paid by the appellant and as the issue was disputed and prone to different interpretations, no motive can be assigned to the appellant to evade any service tax. Appellant, therefore, had a reasonable cause for not discharging duty liability in time due to disputable nature of the service. Therefore, it is a fit case for non-imposition of penalties under Sec. 76 & 78 as per the provisions of Sec. 80 of the Finance Act, 1994 - Decided in favour of assessee.

Summary

Issues:
Appeal against penalties imposed under Sec. 76 & 78 of the Finance Act, 1994.

Analysis:
The appellant appealed against penalties imposed under Sec. 76 & 78 of the Finance Act, 1994, in response to OIA Nos. 514-515/Commr.(A)/CMC/Raj., dated 31-12-2010. The appellant contended that they had paid the entire duty liability along with interest and had not charged service tax from ICICI. The appellant submitted written arguments and waived the right of personal hearing. The appellant cited relevant case laws to support their position.

The adjudicating authority and the first appellate authority's stand was reiterated by Shri P. N. Sarvaiya, AR. Upon hearing the learned AR and examining the case records, it was observed that the appellant provided services related to granting loans for ICICI Bank. The nature of services provided was similar to those in a previous case involving South City Motors Ltd. The judgment in the South City Motors Ltd. case was referenced, highlighting the doubts surrounding the scope of "Business Auxiliary Services" and the interpretation of the taxing entry.

Considering the disputable nature of the service tax implications on the appellant's activities and the payment of the entire service tax amount along with interest, it was deemed that no motive could be attributed to the appellant for evading service tax. The issue was prone to different interpretations, leading to a reasonable cause for the appellant's delay in discharging duty liability. Therefore, it was concluded that the appellant had a valid reason for non-imposition of penalties under Sec. 76 & 78 as per the provisions of Sec. 80 of the Finance Act, 1994. Consequently, the appeal filed by the appellant was allowed.

The judgment was pronounced in court on 3-9-2013 by Shri H.K. Thakur, Member (T) of the Appellate Tribunal CESTAT AHMEDABAD.