2018 (10) TMI 1072 - AT - Service Tax

Construction of residential complex service - non-payment of service tax - penalty - Held that - Undisputedly, the appellant had though rendered taxable services under the category of construction of residential complex service during the relevant period 1.7.2010 to 30.6.2012, but failed to discharge appropriate service tax in time and also failed to furnish periodical ST-3 returns indicating the amount of taxable value received against the said service. Thus the fact of rendition of taxable service as well as value of service had been suppressed from the knowledge of the department - penalty u/s 78 upheld - however, benefit of reduced penalty is to be provided. Liability of service tax of ₹ 1,33,477/- - Held that - Even though the appellant have been claiming that the value against which the said amount of service tax demanded represents loans received from various persons, wrong entry and thereafter correction in their books of account etc. - both the authorities below have not addressed on the defence advanced by the appellant - to ascertain the correctness of the claim of the appellant, the matter needs to be remanded to the adjudicating authority. Appeal allowed in part and part matter on remand.

Summary

Issues:
- Non-payment of service tax during a specific period
- Short payment of service tax for the same period
- Imposition of penalty under Section 78 of the Finance Act, 1994
- Disputed liability of service tax amount

Analysis:
1. Non-payment of service tax during a specific period:
The appellants were engaged in providing construction services during a particular period. A show cause cum demand notice was issued for non-payment of service tax during this period, along with short payment of service tax. The demand was confirmed with interest and penalty. The appellant claimed confusion regarding the levy of service tax during that period, but eventually paid the entire amount of service tax before the notice was issued.

2. Imposition of penalty under Section 78 of the Finance Act, 1994:
The appellant argued that the penalty imposed was unwarranted as they had voluntarily paid the service tax before the notice. They contended that they should be entitled to a 25% reduction in the penalty as per the conditions under Section 78. The tribunal agreed that the penalty should be reduced by 25% as the appellant had complied with the conditions.

3. Disputed liability of service tax amount:
The appellant disputed the liability of a specific service tax amount, claiming it was incorrectly calculated based on the value of loans and other entries. They argued that the taxable value was wrongly computed, and the authorities did not consider the evidence provided. The tribunal found that the authorities did not address the appellant's defense adequately and remanded the matter back to the adjudicating authority for further consideration based on the evidence presented.

4. Judgment:
The tribunal modified the impugned order to allow a 25% reduction in the penalty imposed under Section 78, subject to fulfilling the conditions. The correctness of the disputed service tax liability was to be reevaluated by the adjudicating authority based on the evidence and records presented. The appeal was allowed, and the case was remanded to the adjudicating authority for further consideration in light of the observations made by the tribunal.