2015 (11) TMI 1111 - AT - Service Tax

Delay in payment of service tax - Penalty u/s 76, 77 & 78 - Architect Services - Payment of tax with interest before issuance of SCN - Held that - As the proposed tax amount in the show-cause notice under both the head ₹ 25,00,640/-, thus the ground of the Revenue fails that the same part of the amount paid after issue of show-cause notice. Further as per the chart, all the payments made latest by 4.4.2009, which is prior to issue of show-cause notice dated 28.7.2009. Thus, I hold that the appeal of the Revenue is erroneous and in mistake of facts and fit to be dismissed. - Decided against revenue.

Summary

Issues:
1. Appeal against Order-in-Appeal confirming demand of Service Tax but setting aside penalties.
2. Classification of services provided by the assessee under Business Support Services and Landscape Designing & Consultancy Service.
3. Allegation of suppression of facts and late filing of returns leading to penalties under Sections 76, 77, and 78.
4. Payment of Service Tax and interest before and after the issue of show-cause notice.
5. Applicability of penalties under Sections 76, 77, and 78 based on payment timings.

Issue 1: The Revenue appealed against the Order-in-Appeal confirming the demand of Service Tax but setting aside penalties under Sections 76, 77, and 78. The Revenue contested the deletion of penalties under Section 80 of the Finance Act, 1994, after the demand confirmation of &8377; 25,00,640 with interest of &8377; 2,81,592. The appeal was based on the disagreement with the penalty deletion.

Issue 2: The case involved the classification of services provided by the assessee company, primarily engaged in Architect Services including Landscaping. A show-cause notice was issued for demanding Service Tax under Business Support Services and Landscape Designing & Consultancy Service. The dispute arose regarding the classification of services and the applicability of Service Tax, leading to the demand and recovery of amounts.

Issue 3: The allegation of suppression of facts and late filing of returns resulted in penalties under Sections 76, 77, and 78. The assessee contested the penalties, claiming a bona fide belief that their services fell under Architect Services, not Interior Decorator Services. The Commissioner (Appeals) found the penalties unsustainable based on previous Tribunal rulings and the timing of Service Tax payment.

Issue 4: The issue of payment timings of Service Tax and interest before and after the show-cause notice was crucial. The Revenue argued that part of the tax was paid after the notice, but a report confirmed that the tax amount and interest were paid before the notice. The Tribunal held that all payments were made before the notice, dismissing the Revenue's appeal based on erroneous grounds.

Issue 5: The applicability of penalties under Sections 76, 77, and 78 hinged on the timing of payments and the circumstances surrounding the late filing of returns. The Tribunal found the penalties unsustainable based on the payment timelines and previous Tribunal decisions. The appeal was rejected, and the Cross-Objection was allowed for statistical purposes, concluding the case.