2018 (4) TMI 1978 - AT - Service Tax

Denial of cum tax benefit and imposition of simultaneous penalty under Section 76 as well as under Section 78 of the Finance Act 1994 - Non-payment of service tax - entire amount of service tax with interest was paid to the Department before issuance of SCN - Security Services - HELD THAT - It is not in dispute that at the relevant point of time the appellant had charged a consolidated amount from the customers and while charging such amount the appellant was not aware about the liability of service tax payable on the security services which they discharged subsequently. Therefore as observed in Advantage Media Consultant s case 2008 (3) TMI 59 - CESTAT KOLKATA even though for the period before 2006 the tax component is inbuilt into the value charged from the customers and ought to be considered as cum-tax price; the said benefit accordingly admissible to the appellant. Simultaneous penalty under Section 76 and 78 of the Finance Act 1994 - HELD THAT - The issue is covered by the judgment of the Hon ble Gujarat High Court in Raval Trading Co. case 2016 (2) TMI 172 - GUJARAT HIGH COURT . Consequently imposition of penalty under Section 76 of the Finance Act is liable to be set aside and accordingly dropped. In the result the impugned order is modified and cum tax benefit is hereby allowed penalty continued under Section 76 of the Finance Act is set aside. Further the matter is remanded to the adjudicating authority to recalculate the amount of service tax payable after extending cum tax benefit to the appellant. Appeal allowed by way of remand.

Summary

Issues:
1. Dispute over denial of cum tax benefit.
2. Imposition of penalty under Section 76 and Section 78 of the Finance Act, 1994.

Analysis:
1. The appellant did not dispute the liability of service tax but contested the denial of cum tax benefit. The Ld. Commissioner (Appeals) upheld the denial, stating that the service tax was not shown separately in the invoices. However, the Tribunal disagreed, noting that the appellant charged a consolidated amount from customers without being aware of the service tax liability, which was later paid. Citing the case of Advantage Media Consultant, the Tribunal held that the tax component included in the amount charged should be considered as cum-tax price. Therefore, the cum tax benefit was granted to the appellant, overturning the Commissioner's decision.

2. Regarding the imposition of penalties under both Section 76 and Section 78 of the Finance Act, 1994, the Tribunal referred to the judgment of the Hon'ble Gujarat High Court in Raval Trading Co. case. Following the precedent, the Tribunal set aside the penalty under Section 76, stating that the simultaneous imposition of penalties was contrary to the law. Consequently, the penalty under Section 76 was dropped, and the matter was remanded to the adjudicating authority to recalculate the service tax payable after considering the cum tax benefit. The appeal was allowed, directing a remand to the adjudicating authority for further action.