2017 (9) TMI 1785 - AT - Service Tax

Adjustment of amounts paid by them during the pendency of the adjudication and the appeal proceedings - refund of excess amount - Held that - Any amounts paid by an assessee or a litigant during the pendency of the appeal should be construed as an amount paid in respect of the said litigation and there being finality of the order of the Tribunal that extended period cannot be invoked by the show cause notice dated 21-3-2006 the amount which has been deposited by the appellant needs to be refunded to him after adjusting the confirmed duty liability and the interest thereof. Penalty u/s 76 of FA - Held that - This is a fit case to invoke provisions of Section 80 of the Finance Act 1994 and set aside the penalty as appellant having been litigating the issue for liability to pay tax as a State Government Body has made out a case for invoking the said provisions - penalty set aside. Appeal disposed off.

Summary

Issues:
Appeal against Order-in-Original No. 155/2011 - De novo order passed by adjudicating authority - Tribunal's remand order on Service Tax liability - Adjustment of amounts paid during proceedings - Imposition of penalties under Section 76 - Invocation of Section 80 of the Finance Act, 1994.

Analysis:
The appeal was directed against Order-in-Original No. 155/2011 dated 29-9-2011. The Tribunal remanded the matter back to the adjudicating authority for a de novo order following Final Order No. 642/2009 dated 29-3-2010. The Bench had earlier held that the demand for Service Tax liability on cargo handling and storage warehousing services for a specific period was time-barred. The High Court upheld the Tribunal's decision on limitation. The adjudicating authority confirmed the demands within the limitation period, imposed penalties, but did not allow adjustment of amounts paid during the proceedings. The appellant contested this decision, arguing that the amounts paid should be refunded after adjusting the confirmed duty liability and interest. The penalties imposed under Section 76 were also challenged, claiming that there was no fraud or intentional evasion, and invoking Section 80 of the Finance Act, 1994.

Upon careful consideration, it was found that the adjudicating authority's findings on the amounts paid during the proceedings were incorrect. Any amounts paid during the appeal process should be treated as payments related to the litigation, and as the extended period could not be invoked, the deposited amount needed to be refunded after adjusting the confirmed duty liability and interest. Regarding the penalty under Section 76, it was deemed fit to invoke Section 80 of the Finance Act, 1994, and set aside the penalty. The appellant, being a State Government Body, had a valid case for invoking the provisions of Section 80. Consequently, the penalty imposed was set aside.

In conclusion, the appeals were disposed of with the direction to refund the amounts paid by the appellant after adjusting the confirmed duty liability and interest, and the penalty imposed under Section 76 was set aside by invoking Section 80 of the Finance Act, 1994. The order was pronounced in Open Court on 27-9-2017.