2017 (4) TMI 941 - AT - Central Excise

Imposition of penalty - case of appellant is that appellant had paid the entire service tax alongwith interest in regard to BAS services even before issuance of SCN - Held that - Appellant has paid service tax of ₹ 3,56,681/- alongwith interest in regard to GTA service prior to issuance of SCN. A small amount of ₹ 1,38,050/- stands unpaid with regard to GTA services. Therefore, the confirmation of entire demand and equal penalty imposed on the entire service tax u/s 78 of FA is unjustified. The penalty to the extent that has been paid by appellant prior to issuance of SCN requires to be set aside - The impugned order is modified to the extent of revising the penalty u/s 78 to the amount of service tax short paid by the appellant to the tune of ₹ 1,38,050/-. The penalty imposed u/s 77 is sustained - appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
1. Service tax liability on GTA services and BAS services.
2. Penalty imposed on the appellant.

Analysis:
1. The appellants, engaged in manufacturing photovoltaic cell modules, were investigated for not discharging their service tax liability on GTA services and commission paid to foreign service providers under the reverse charge mechanism. A Show Cause Notice was issued proposing recovery of service tax amounts. The original authority confirmed the demand and imposed penalties. The appellants appealed, contesting only the penalty imposed. They had paid the entire service tax for BAS services before the notice and a portion for GTA services. The appellant argued that the uncertainty regarding service tax liability during the relevant period should be considered for penalty reduction. The AR reiterated the findings of the impugned order.

2. The Tribunal noted that the appellants had paid the entire service tax for BAS services and a portion for GTA services before the show cause notice. A small amount remained unpaid for GTA services. The Tribunal found the confirmation of the entire demand and equal penalty unjustified. The penalty amount paid before the notice was set aside, and the penalty under section 78 was revised to the amount of service tax short paid for GTA services. The penalty under section 77 was sustained. The appeal was partly allowed without affecting the confirmed demand or interest.