2015 (1) TMI 1097 - AT - Service Tax

Clearing and forwarding service - Penalty u/s 76 & 77 - denial of cum tax benefit - waiver of penalty under Section 80 - Held that - As regards cum tax benefit, following decision of Commissioner Vs Advantage Media Consultant 2008 (10) TMI 570 - SUPREME COURT - appellants are eligible for the cum tax benefit. As regards penalty u/s 76, following decision of Transport Solution Group Vs CCE Mumbai-IV 2013 (6) TMI 607 - CESTAT MUMBAI , Commissioner (Appeals) order of reducing penalty under Section 76 is liable to be set aside. - Decided party in favour of Revenue.

Summary

Issues: Denial of cum tax benefit, reduction of penalty under Section 76.

Analysis:

1. Denial of Cum Tax Benefit:
The case involved appeals by both the assessee and the Revenue against the Order-in-Appeal regarding service tax liability for the period April '99 to March '04. The assessee, a consignment agent, had delayed payment of service tax amounting to Rs. 44,31,640. The main contention was the denial of cum tax benefit and waiver of penalty under Section 80. The assessee argued that confusion regarding the reimbursement amount from the service receiver caused the delay in payment. The Revenue, on the other hand, opposed the reduction of penalty under Section 76. The appellate authority considered the historical context of service tax liability on consignment agents and the subsequent shift in liability to service providers. The issue was settled by the Supreme Court in related cases, leading to a retrospective amendment in 2003 to validate levy and collection of service tax.

2. Cum Tax Benefit and Penalty Waiver:
The assessee claimed cum tax benefit before the appellate authority, even though it was not raised before the adjudicating authority. The Tribunal's precedent in the case of Commissioner Vs Advantage Media Consultant supported the cum tax benefit claim during the relevant period. The Supreme Court upheld this decision, emphasizing that service tax, being an indirect tax, should be borne by the consumer and collected by the assessee. Therefore, the appellants were deemed eligible for the cum tax benefit.

3. Reduction of Penalty under Section 76:
Regarding the imposition of penalty under Section 76, the adjudicating authority initially imposed a penalty of Rs. 7,43,586, which was reduced to Rs. 1.50 lakhs by the lower appellate authority. The appellate authority justified the penalty reduction based on the delay in payment of service tax by the assessee. However, the Tribunal found no valid grounds for a total waiver of penalty under Section 80. The Revenue's appeal against the reduction of penalty under Section 76 was upheld, emphasizing that the penalty under Section 76 is imposed for delay in payment of service tax without requiring mens rea. Precedents like the case of Transport Solution Group Vs CCE Mumbai-IV supported the sustainability of penalty under Section 76. Therefore, the imposition of the penalty as per the adjudicating authority was restored.

In conclusion, the assessee's appeal was partly allowed for extending cum tax benefit, while the reduction of penalty under Section 76 was set aside, and the penalty imposed by the adjudicating authority was restored. The appeals were disposed of accordingly.