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2018 (8) TMI 1690 - HC - Service TaxInvocation of section 80 of FA for setting aside penalties - bonafide belief - extended period of limitation. Whether the learned CESTAT is correct in holding that where relief from penalties is granted by giving the benefit under Section 80 of the Act of 1994 (on the basis of bonafide belief on the part of the Assessee, the extended period of limitation cannot be invoke for confirmation of service tax demand on the basis of the allegations of willful missstatement, suppression of facts or deliberate contravention of Rules with an intention to evade the duty payment? Whether the learned CESTAT was correct in holding that the ingredients of Section 80 of the Act of 1994 are same as that of the Act of 1994 are same as that of the ingredients which are required for invoking extended period of limitation provided in the proviso to Section 73(1) of the Act of 1994? Held that - Reliance placed by appellant in the case of M/S. SANKHLA UDYOG VERSUS CCE & ST, JAIPUR 2014 (12) TMI 614 - CESTAT NEW DELHI , where it was held that the adjudicating authority has clearly stated that there was interpretation of law involved and the extended the benefit of Section 80 of Finance Act, 1994 for not imposing and penalty. It clearly shows that the ingredients required for invoking extended period are not present in this case. Indeed in the entire adjudication order there is no word as to how the extended period is invocable - the decision which was relied upon by the Tribunal was never challenged by the department and in view of the consistent practice that the decision which has been accepted by the department should be accepted for every assessee. The issues are answered in favor of assessee against the department - appeal dismissed - decided against Revenue.
Issues Involved:
1. Whether the relief from penalties under Section 80 of the Finance Act, 1994, prevents the invocation of the extended period of limitation for confirming service tax demand. 2. Whether the ingredients required for invoking Section 80 are the same as those required for the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994. Issue-wise Detailed Analysis: 1. Relief from Penalties under Section 80 and Extended Period of Limitation: The Tribunal observed that the adjudicating authority invoked Section 80 of the Finance Act, 1994, to waive penalties, acknowledging the bona fide belief of the appellant that they were not liable to service tax. The Tribunal noted that the appellant, a state government undertaking, had already deposited ?68 lakh voluntarily and that the evasion of service tax would not benefit any private entity. This justified the waiver of penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The Tribunal referenced several cases, including Sankhla Udyog Vs. CCEST, Jaipur and BSNL Vs. CCE, Ahmedabad, to support that the extended period of limitation would not be invocable when penalties are waived due to bona fide belief. 2. Ingredients of Section 80 and Extended Period of Limitation: The Tribunal held that the ingredients required for invoking the extended period of limitation under the proviso to Section 73(1) of the Finance Act, 1994, are the same as those required for invoking Section 80. The Tribunal cited the case of CCE, Allahabad Vs. Bharat Yantra Nigam Ltd., emphasizing that a public sector undertaking cannot be accused of willful misstatement, suppression of facts, or deliberate contravention of rules with the intent to evade duty payment. Original Order and Conduct of the Respondent: The appellant contended that the respondent failed to disclose complete information, did not take registration, did not pay service tax, and did not file returns, which was only discovered through departmental investigation. The adjudicating authority imposed a penalty of ?2,63,29,092/- based on the deliberate act of suppression of information. However, the authority also acknowledged the bona fide belief of the respondent and waived the penalties under Section 80, considering the state government undertaking status and voluntary deposit of ?68 lakh. Relevant Case Laws: The appellant relied on several Supreme Court decisions, including Tamil Nadu Housing Board vs. Collector of Central Excise, Padmini Products vs. Collector of C. Ex., and Continental Foundation JT. Venture vs. Commr. Of C. Ex., to argue that the extended period of limitation requires proof of fraud, collusion, or willful misstatement with the intent to evade duty. The Tribunal found that in the present case, there was no evidence of such intent, and the bona fide belief of the respondent justified the waiver of penalties under Section 80. Conclusion: The High Court upheld the Tribunal's decision, stating that the consistent practice of accepting decisions not challenged by the department should be followed. The issues were answered in favor of the assessee, and the appeal was dismissed.
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