2018 (9) TMI 174 - AT - Service Tax

Waiver of penalties in section 77 and 78 - appellant had paid the entire confirmed service tax along with interest before passing the order in original - Held that - The appellant have not produced the reconciliation before the lower authority. Therefore for deciding the quantum of penalty first it is to be established the correct liability of Service Tax - the matter should go back to the original authority to ascertain the fact whether the Service Tax liability is 1, 83, 244 or the amount which confirmed the order in original and upheld in the order in appeals - appeal allowed by way of remand.

Summary

Issues:
1. Appeal against order upholding service tax liability and penalties.
2. Discrepancy in service tax liability amount.
3. Contesting penalties under sections 77 & 78.
4. Reconciliation chart not considered by lower authorities.
5. Need for establishing correct service tax liability for penalty determination.
6. Remanding the case for verification of reconciliation and penalty assessment.

Analysis:
1. The appeal was filed against an order upholding service tax liability and penalties imposed on the appellant for not correctly discharging their service tax liability during the period April 2011-March 2015. The appellant, engaged in mandap keeping, restaurant, and hotel accommodation services, had suppressed certain values in their ST-3 returns, resulting in a demand of &8377;21,23,463, confirmed by the original authority along with penalties under sections 77 & 78. The appellant sought waiver of penalties, having already paid the confirmed service tax and interest.

2. The appellant's counsel argued that the total liability raised by the department was incorrect, presenting a reconciliation chart showing a lower service tax liability of &8377;1,83,244. It was contended that penalties under sections 77 & 78 should not have been imposed, as the correct value was declared in the ST-3 return, warranting no penalties.

3. The Revenue representative reiterated the findings of the impugned order, stating that the reconciliation chart was not presented before the original authority or the Commissioner (A). It was emphasized that since the appellant did not contest the service tax liability, reconciliation should not be considered.

4. The Tribunal noted that the appeal was solely for the waiver of penalties under sections 77 & 78, not the service tax liability itself. It was observed that the reconciliation, although submitted before the Commissioner (A), was not considered. The Tribunal directed the matter to be remanded to the original authority to establish the correct service tax liability, either &8377;1,83,244 or the confirmed amount, for determining the quantum of penalty.

5. The adjudicating authority was instructed to verify the reconciliation along with relevant books of accounts to decide the penalty amount accurately. The Tribunal clarified that the service tax demand and interest would stand, as the appellant did not contest the service tax liability from the stage of Commissioner (A), focusing only on the penalty under sections 77 & 78.

6. Ultimately, the appeal was allowed by remanding the case to the adjudicating authority for further assessment of the reconciliation and determination of penalties under sections 77 & 78, emphasizing the need to establish the correct service tax liability for penalty calculation.