2019 (1) TMI 1038 - AT - Service Tax

Manpower Recruitment/Supply Agency - Works Contract - short payment of service tax - there is a difference between the taxable values shown in the ST-3 Return when compared with the amount received in bank account for the period 2009-10 to 2013-14 - Held that - The Original Authority has come to the conclusion that the interest amount paid by the appellant does not relate to the present demand but relate to some other audit objection but the same has not been categorically brought on record as to which demand, this interest payment has been made by the appellant. The Original Authority could have easily verified the fact as to which demand, this interest relates to but the same has not been specifically verified by the Original Authority and the Commissioner (A) has also not gone in to this aspect and simply confirmed the Order-in-Original. Further, since the appellant has paid the Service Tax prior to the issuance of SCN and also paid the reduced penalty of 15%. In view of this, the imposition of equal penalty under Section 78 is not sustainable in law therefore the said penalty is set aside and with regard to the interest payment made by the appellant, it is to be ascertained whether the said payment relates to the present demand or earlier demand. For this purpose, the matter is remanded back to the Original Authority. Appeal allowed by way of remand.

Summary

Issues:
1. Imposition of penalty under Section 78 of the Act without proper appreciation of facts and law.
2. Discrepancy in the interest amount paid by the appellant and its relation to the present demand.
3. Appellant's compliance with payment of Service Tax, interest, and reduced penalty.
4. Verification of interest payment by the Original Authority.
5. Remand of the matter to the Original Authority for determining interest liability.

Analysis:
The appeal was filed against the order rejecting the appellant's appeal regarding a demand for Service Tax of ?13,02,881/- due to a difference in taxable values for the period 2009-10 to 2013-14. The appellant argued that the penalty under Section 78 was unjust as there was no suppression, and they had paid the Service Tax, interest, and reduced penalty promptly upon audit findings. The appellant claimed that the interest payment of ?2,42,380/- was related to the present demand, contrary to the authorities' view. The AR defended the impugned order.

Upon review, the Tribunal noted the appellant's timely payment of Service Tax, interest, and reduced penalty. However, it found discrepancies in determining if the interest payment related to the present demand or an earlier one. The Original Authority failed to specify the nature of the interest payment, leading to confusion. The Tribunal ruled that the imposition of an equal penalty under Section 78 was unsustainable, setting it aside. The matter was remanded to the Original Authority to ascertain the interest liability, if any, related to the present demand. The appellant was directed to pay any determined interest liability in accordance with the law. Consequently, the appeal was allowed by way of remand.

This detailed analysis highlights the issues of penalty imposition, interest payment discrepancies, compliance with tax obligations, verification lapses by the authorities, and the remand for interest liability determination, resulting in the appeal's allowance.