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2019 (5) TMI 975 - AT - Service TaxPenalty u/s 78 of FA - Construction of residential complex service - HELD THAT - In the present case, two factors are working in favour of the assessee; one, they have taken registration voluntarily on 24.10.2011, secondly, the entire amount of Service Tax along with interest and applicable penalty for delay in discharging Service Tax had been discharged much before the commencement of the investigation against them - The adjudicating authority after analyzing the evidence on record and conduct of the appellant imposed penalty under Sections 76 and 77 of the Finance Act, 1994. When all the facts are duly recorded in the Books of Account and the appellants have not collected the Service Tax separately from the buyers during the relevant time and the appellant has not disputed their liability, the order of the adjudicating authority is conformity with law. Appeal allowed - decided in favor of appellant.
Issues involved:
Imposition of penalty under Section 78 of the Finance Act, 1994 by the Commissioner (Appeals) - Justification. Detailed Analysis: 1. Issue of Penalty under Section 78: The primary issue in the present appeal was whether the imposition of penalty under Section 78 of the Finance Act, 1994 by the Commissioner (Appeals) was justified. The appellant had provided taxable services under the category of construction of residential complex service from 1.7.2010 to 31.3.2012. Initially, there was confusion regarding the applicability of Service Tax under this category, leading to non-payment and non-registration with the Department. Subsequently, the appellant voluntarily registered on 24.10.2011 but did not pay the Service Tax until their premises were visited by departmental officers on 28.12.2011. Following this visit, the appellant paid the outstanding Service Tax amounting to ?31,60,690/- along with interest. The adjudicating authority imposed penalties under Sections 76 and 77 of the Finance Act, 1994 but did not impose penalty under Section 78. The Revenue appealed this decision, leading to the present appeal. 2. Appellant's Argument: The appellant argued through their Counsel that the confusion in the industry regarding the levy of Service Tax on construction of residential complex service led to the delay in compliance. They contended that the registration was voluntarily taken on 24.10.2011, and the Service Tax liability was discharged with interest and penalty for the period of January 2012 to June 2012 before any investigation was initiated. The appellant maintained that the payments from buyers were duly recorded in their Books of Accounts, and there was no intention to evade payment of Service Tax. They argued that the penalty under Section 78 was unwarranted in their case. 3. Revenue's Submission: On the contrary, the Revenue argued that the payment of Service Tax by the appellant was not voluntary but a result of the visit by departmental officers to their premises. However, they acknowledged that all payments received from flat buyers were properly recorded in the Books of Accounts. 4. Judgment and Analysis: The Member (Judicial) carefully considered both sides' submissions and noted the confusion prevailing in the industry regarding the levy of Service Tax on construction services during the relevant period. The appellant voluntarily registered and paid the entire Service Tax amount with interest and penalty before the investigation began. The Member observed that the appellant had not collected Service Tax separately from buyers, and all relevant facts were duly recorded in their Books of Accounts. Given these circumstances, the Member found no justification for invoking Section 78 of the Finance Act, 1994 and imposing a penalty equivalent to the Service Tax paid by the appellant. Consequently, the impugned order was set aside, and the appeal was allowed. In conclusion, the judgment emphasized the importance of voluntary compliance, proper record-keeping, and the impact of industry-wide confusion on tax compliance. The decision highlighted the significance of timely registration and payment of taxes, ultimately leading to the allowance of the appeal in favor of the appellant.
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