2015 (4) TMI 744 - AT - Service Tax

Discharge of service tax liability by other branch office - whether the service tax payment made by the appellant's Mumbai unit could be considered as due discharge of service tax by the appellant - Penalty u/s 76 & 78 - Held that - Some excess payment of service tax has been paid by the appellant's Mumbai unit but whether that excess payment was with respect to the appellant's unit at Silvassa is not clear. Appellant has approached their Mumbai Bank branch in September 2014 to either provide a certificate or give them the copies of TR-6/GAR -7 challans/Bank Certificates that during the period 1998-99 to 2004-05 entire service tax also was paid at Mumbai for the Silvassa unit. A copy of one such challan No. 05/2000-2001 has been furnished by the appellant which gives the assessee code number and address of appellants Mumbai office. There is no indication on the challan that this amount is paid with respect to appellant's Silvassa unit. In the absence of any such co-relation, it can not be said that appellant has discharged the service tax liability of Silvassa unit at their Mumbai unit/office. Adjudicating authority has correctly confirmed the service tax liability along with interest. So far as imposition of penalties under section 76 and 78 of the Finance Act, 1994 are concerned, appellant has claimed the benefit of Section 80 of the Finance Act, 1994 to argue that they were under the reasonable belief that service tax with respect to Silvassa unit has been properly discharged. - appellant had paid some excess amounts with respect to their Silvassa unit. Appellant thus has a reasonable cause to hold that service tax liability of Silvassa unit was discharged in Mumbai. However, due to lack of co-relating documents, it is not possible to establish that the entire service tax liability of Silvassa unit has been discharged. In view of the above, this case is fit for invocation of Section 80 to hold that penalties are not imposable upon the appellant under Section 76 and 78 of the Finance Act, 1994, even if extended period is applicable in these proceedings. - Decided partly in favour of assessee.

Summary

Issues:
1. Extension of stay application and appeal regarding service tax payment.
2. Whether service tax payment made by the Mumbai unit can be considered as due discharge of service tax by the appellant.
3. Imposition of penalties under sections 76 and 78 of the Finance Act, 1994.

Analysis:

Issue 1: Extension of Stay Application and Appeal
The appellant filed an extension of stay application and an appeal concerning an order passed by the Adjudicating authority. The appellant, represented by a Chartered Accountant, argued that the service tax had been paid from their Mumbai office, which should be considered as payment for their Silvassa unit as well. The appellant contended that they should not be liable to pay service tax twice. The Revenue, represented by an authorized representative, opposed this argument, stating that the payment details did not clearly indicate payment for the Silvassa unit. The Tribunal allowed the extension of stay application as the appeal was being taken up for disposal.

Issue 2: Service Tax Payment by Mumbai Unit
The main issue was whether the service tax payment made by the Mumbai unit could be considered as a discharge of service tax liability for the Silvassa unit. The Tribunal observed that while some excess payment had been made by the Mumbai unit, it was not clear if this was specifically for the Silvassa unit. The appellant was directed to approach the Mumbai Bank branch for clarification and to discharge the service tax liability for the Silvassa unit. The Adjudicating authority's decision confirming the service tax liability was upheld, emphasizing the need for proper documentation to establish the payment correlation.

Issue 3: Imposition of Penalties
Regarding the imposition of penalties under sections 76 and 78 of the Finance Act, 1994, the appellant invoked Section 80 to argue that they believed the service tax for the Silvassa unit had been discharged properly. Although there was some indication of excess payments for the Silvassa unit, the lack of conclusive evidence prevented the establishment of full discharge of the service tax liability. Therefore, penalties under sections 76 and 78 were deemed not applicable due to the reasonable cause shown by the appellant. The appeal was allowed to the extent that penalties were not imposed on the appellant.

In conclusion, the Tribunal allowed the appeal in part, emphasizing the importance of proper documentation and clarification regarding service tax payments to avoid penalties and ensure accurate discharge of liabilities.