2016 (11) TMI 1290 - AT - Service Tax

Demand - construction of residential complex services - Held that - For the period 01.07.2010 to 31.03.2012 it is seen that the appellant on being pointed by the officers immediately discharged their tax liability along with interest. In as much as the issue of taxability was the subject matter of the Hon ble High court of Bombay whereas the vires of the same was challenged it can be safely concluded that there was confusion in respect of the taxability of the same. In such a scenario the provisions of section 73B would come into play thus not requiring any issuance of show cause notice. As such I find no justifiable reasons to impose penalty upon the assessee. Accordingly while confirming tax already paid along with interest I set aside the penalty imposed on the said count. As regards amount of Rs. 2, 52, 715/- which appellant collected from their customs for the period 2007-08 the same also stands paid by the assessee subsequently along with interest of Rs. 1, 02, 722/-. I do not find any merit in the appellant s plea of bonafide in respect of the said amount in as much as having collected the same in the name of the revenue and having retained the same definitely reflects upon appellant s intention of enriching themselves at the cost of Revenue. While upholding the confirmation of the said demand along with interest I am of the view that the appellant needs to be penalized on the said count. The penalty of Rs. 10, 000/- imposed by the lower authorities under section 77 of the Finance Act is accordingly upheld. The appeal is disposed off.

Summary

Issues:
Confirmation of service tax liability for the construction of residential complex services for a specific period and prior period, imposition of penalty, confusion regarding taxability of construction services, penalty for not depositing collected tax amount with the Revenue.

Analysis:
The judgment addresses the confirmation of service tax liability against the appellant for the construction of residential complex services for a particular period and a prior period. The appellant accepted the liability and deposited the amount along with interest. The appellant contended that confusion existed regarding the taxability of construction services, citing a circular and a High Court judgment. The tribunal considered this confusion and the immediate payment of tax by the appellant, concluding that penalty imposition was not justified for the period in question, setting aside the penalty.

Regarding the tax amount collected by the appellant but not deposited with the Revenue for the prior period, the appellant argued that it was collected mistakenly, and no penalty should be levied. The tribunal noted that the tax was subsequently paid by the appellant along with interest. However, the tribunal found no merit in the appellant's plea of bonafide intent, as collecting and retaining the tax amount reflected an intention to enrich themselves. Consequently, the confirmation of the demand along with interest was upheld, and a penalty of &8377; 10,000 under section 77 of the Finance Act was imposed.

In summary, the tribunal upheld the confirmation of the service tax liability for the specific period, considering the confusion in the field regarding taxability. The penalty for this period was set aside. For the tax amount collected but not deposited for the prior period, the confirmation of demand along with interest was upheld, and a penalty of &8377; 10,000 was imposed due to the appellant's intention to enrich themselves. The appeal was disposed of accordingly.