2015 (6) TMI 868 - AT - Service Tax

Levy of penalty - appellant realizing its liability, on being so pointed out by the Revenue, have deposited the admitted tax along with interest - Goods Transport Agency Services - Works contract service - Held that - there is no finding either in the Order-in-Original or in the Order-in-Appeal indicating any action or inaction on part of the appellant indicating towards collusion, fraud, active concealment of tax under the Finance Act, 1994. However, it appears that the appellant had turn over above ₹ 40 lakhs per annum under some of the financial year during the disputed period. In such circumstances, as provided under Section 44AB of Income Tax Act, the Books of Account were subject to tax audit and accordingly, it appears that the appellant was receiving the service of professionals like C.A. understanding tax obligations. But, there is no finding of any contumacious conduct on part of the appellant. - appellant is entitled to benefit under Section 73(3) of the Finance Act, 1994 and it appears that the show-cause notice was issued without proper consideration of the facts on record. In this view of the mater, penalty as reduced by the first appellate authority is dropped and set aside and the appellant will be entitled to refund or adjustment of the excess tax paid, which shall be calculated and granted by the adjudicating authority. - Decided in favour of assessee.

Summary

Issues:
1. Liability for Service Tax under commercial and industrial construction services, works contract service, and input services under Goods Transport Agency Services.
2. Registration under Service Tax provisions.
3. Demand of Service Tax for the extended period.
4. Applicability of penalty under Sections 70, 77(1)(a), and 78 of the Finance Act, 1994.
5. Mis-classification and wrong classification of tax liabilities.
6. Liability for Service Tax on materials received free of cost.
7. Appeal against confirmation of penalty.

Analysis:
1. The appellant, a partnership firm engaged in construction services, received a show-cause notice for non-payment of Service Tax. The notice covered various services provided by the appellant, including commercial construction, works contract, and input services under Goods Transport Agency Services. The appellant responded promptly, sought registration, and paid the admitted tax amounts along with interest. The show-cause notice alleged non-payment of specific amounts for different services provided.

2. The appellant appealed against the Order-in-Original, where the proposed demand was confirmed except for a disputed amount under Works Contract Service. The Commissioner (Appeals) dropped a portion of the demand based on mis-classification and non-liability for Service Tax on materials received free of cost. The remaining demand was reduced, along with penalties imposed under Sections 70, 77(1)(a), and 78 of the Finance Act, 1994.

3. The appellant contended that all transactions were duly recorded, and upon realizing their liability, they promptly paid the admitted tax and interest. The appellant invoked Section 73(3) of the Finance Act, 1994, which exempts further show-cause notices if the tax liability is admitted and paid upon intimation by the Revenue authority.

4. The Tribunal noted that the appellant's turnover exceeded a certain threshold, subjecting their Books of Account to tax audit under the Income Tax Act. Despite professional assistance in tax matters, there was no evidence of fraudulent conduct or active tax evasion by the appellant. Consequently, the Tribunal found the appellant entitled to the benefit under Section 73(3) and ruled that the show-cause notice was issued without proper consideration of the facts.

5. As a result, the Tribunal allowed the appeal, set aside the reduced penalties imposed by the Commissioner (Appeals), and directed the adjudicating authority to calculate and grant any excess tax paid by the appellant. The decision granted the appellant consequential benefits in accordance with the law, emphasizing the lack of collusion, fraud, or deliberate tax evasion in the appellant's actions.