9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (9) TMI 1109 - AT - Service TaxImposition of penalty without quantification of the penalty amount - Section 78 of the Finance Act 1994 - contravention of the provisions of Finance Act 1994 - non-discharge of service tax on the invoices raised in respect of Annual Maintenance Contracts (AMC) on their customers - service tax alongwith interest discharged before issuance of SCN - Held that - Section 73(3) is very clear as it says that if tax is paid along with interest before issuance of show-cause notice then in that case show-cause notice shall not be issued. In this case I find that the contention of the appellant that he bonafide believed that he is not liable to pay service tax but during the audit the audit party informed him that he is liable to pay service tax then he immediately paid the entire service tax along with interest. Except mere allegation of suppression the Department did not bring any material on record to prove that there was suppression and concealment of facts to evade payment of tax. Consequently in my opinion the imposition of penalty under Section 78 of the Act is not justified and bad in law. Moreover in the impugned order the learned Commissioner (Appeals) has not recorded any finding on suppression of facts by the appellant with an intention to evade tax. In view of the above discussion I set aside the impugned order. - Decided in favour of appellant
Issues:
- Appeal against ex-parte order by Commissioner (Appeals) regarding penalty under Section 78 of the Finance Act, 1994 without quantification. - Appellant's belief regarding service tax liability on Annual Maintenance Contracts (AMC) and supply of UPS systems. - Allegation of contravention of provisions of Finance Act, 1994 leading to a show-cause notice. - Appeal by Revenue against the Order-in-Original refraining from imposing penalty under Sections 76, 77 & 78 of the Finance Act. - Failure to send personal hearing notice to the appellant's new address. - Applicability of penalty under Section 78 of the Act based on suppression of facts and intention to evade tax. Analysis: 1. The appeal was filed against an ex-parte order by the Commissioner (Appeals) regarding the imposition of penalty under Section 78 of the Finance Act, 1994 without quantification. The appellant, engaged as sole distributors for a company in Japan, was audited for non-payment of service tax on Annual Maintenance Contracts (AMC) and supply of UPS systems. The appellant immediately paid the service tax and interest upon notification by the audit team. 2. The appellant argued that they were under a bonafide belief that services like AMC did not attract the provisions of the Finance Act, 1994, and that they were unaware of the service tax implications. They also believed that supply of UPS systems attracted only VAT, not service tax. The appellant contended that the order was passed in violation of Natural Justice as they had informed the Service Tax Department about their change of address, but did not receive a personal hearing notice. 3. The Tribunal analyzed the provisions of Sections 73, 76 & 78 of the Finance Act, 1994, and previous judgments cited by the appellant. It was noted that if tax is paid along with interest before the issuance of a show-cause notice, the notice shall not be issued. The Tribunal found that the appellant immediately paid the service tax upon being informed by the audit team, and there was no material to prove suppression or concealment of facts to evade tax. 4. The Tribunal found that the imposition of penalty under Section 78 was not justified as there was no evidence of suppression of facts by the appellant with an intention to evade tax. The Commissioner (Appeals) did not record any finding on suppression of facts. Consequently, the Tribunal set aside the impugned order and allowed the appeal of the appellant. 5. The Tribunal's decision was based on the lack of evidence for suppression of facts and the appellant's immediate payment of service tax upon notification. The Tribunal highlighted the importance of bonafide belief and adherence to Natural Justice principles in tax matters. The appeal against the ex-parte order was allowed, providing relief to the appellant in the case.
|
