2016 (9) TMI 44 - AT - Service Tax

Differences in value appearing in balance sheet and returns - Authorized Service Station Business Auxiliary Services Demand of tax and interest imposition of penalty under section 78 or 76 of the Finance Act 1994 - waiver of penalty section 80 of the Finance Act, 1994 Held that - When the Balance sheet entries and the value as reflected in ST-3 returns are based upon different accounting system and when the entire value stands reflected in the balance sheet the difference in the value of services cannot be attributed to any malafide on the part of the assessee. The appellant by agreeing to the audit view deposited the tax immediately when objection raised penalty not imposed demand of tax and interest upheld which has been already paid by appellant appeal allowed decided partly in favor of appellant.

Summary

Issues:
1. Discrepancy in taxable value reflected in ST-3 returns and balance sheet.
2. Imposition of penalties under sections 78 and 76 of the Finance Act.
3. Challenge of penalty imposition by the assessee and Revenue before Commissioner (A).
4. Separate orders by Commissioner (A) enhancing penalty for Revenue's appeal.
5. Appeal by the assessee against the orders of Commissioner (A).

Analysis:

1. The appellant, registered under service tax for Authorised Services Station and Business Auxiliary Services, faced proceedings due to a noted value difference in their balance sheet and ST-3 returns for 2007-08 to 2011-12. The demand of ?1,39,966 was contested but paid with interest before proceedings began.

2. The appellant presented reconciliation statements during adjudication, leading to a reduced demand of ?1,02,648 with penalties of ?25,662 under sections 78 and 76 of the Finance Act 1994.

3. Both the assessee and Revenue appealed to the Commissioner (A). The assessee challenged penalty imposition, citing section 80 of the Finance Act, while Revenue sought enhanced penalties due to non-deposit of penalties with the initial duty payment.

4. Commissioner (A) dealt with the appeals separately, rejecting the assessee's appeal and enhancing the penalty to 50% of the duty amount in Revenue's appeal, resulting in two separate appeals by the assessee.

5. The Hon'ble Ms. Archana Wadhwa analyzed the case, noting the appellant's obligation to maintain accounts under the Companies Act. She found that discrepancies arose due to different accounting systems for balance sheet and ST-3 returns, without malicious intent. The appellant promptly paid the differential tax upon audit objection, leading to the set-aside of penalty imposition under sections 78 and 76 of the Finance Act.

6. The judgment upheld the demand payment by the appellant with interest, while overturning the penalties, allowing both appeals on that basis.

This detailed analysis covers the issues of discrepancy in values, penalty imposition, challenges before the Commissioner (A), separate judgments by the Commissioner (A), and the final decision by the Hon'ble Ms. Archana Wadhwa, Member (Judicial) at the Appellate Tribunal CESTAT NEW DELHI.