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2019 (3) TMI 1054 - AT - Service Tax


Issues involved:
1. Demand of service tax liability on differential amount
2. Imposition of penalties under the Finance Act, 1994
3. Appeal against penalty imposed under section 78 of the Act

Analysis:

Issue 1: Demand of service tax liability on differential amount
The case involved differences between taxable values in ST-3 returns and service charges reflected in the balance sheet. The original authority confirmed a demand of &8377; 15,56,185/- with interest and imposed penalties under the Finance Act, 1994. In appeal, the Commissioner set aside the demand on certain expenses but upheld it on other charges from a specific date, directing quantification of the demand. The appellant appealed seeking to set aside the penalty imposed under section 78 of the Act.

Issue 2: Imposition of penalties under the Finance Act, 1994
During the hearing, the appellant did not contest the tax liability but sought to overturn the penalty under section 78. The appellant argued that the tax liability arose due to a genuine belief that sub-contract charges were not taxable. The appellant relied on a Board Circular from 1997 to support their position. The respondent reiterated the findings in the impugned order.

Issue 3: Appeal against penalty imposed under section 78 of the Act
After considering both arguments, the tribunal found merit in the appellant's assertion regarding the penalty. The tribunal acknowledged the confusion surrounding the issue, leading to litigation. Due to reasonable cause for non-payment of tax liability, the tribunal invoked the provisions of Section 80 of the Finance Act and set aside the penalty under section 78. The appeal was partly allowed by overturning the penalty while maintaining the rest of the impugned order, including the confirmed tax liability.

This judgment highlights the importance of reasonable cause in non-payment of tax liabilities and the tribunal's authority to set aside penalties under specific provisions of the Finance Act. The case underscores the significance of legal interpretations and reliance on official circulars in tax disputes.

 

 

 

 

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