2019 (7) TMI 918 - HC - Service Tax

Waiver of penalty - benefit of section 80 of FA - Taxability - amount received by the petitioner as a Subcontractor - amount received by the petitioner as a Subcontractor - bonafide belief - HELD THAT - Section 80 as it stood then provides that no penalty shall be imposed on the assessee for any failure referred in the said provisions. If the assessee proves that there was reasonable cause for the said failure. For an assessee to bring his case within the ambit and purview of a reasonable cause, the assessee will have to demonstrate that there are reasonable grounds to suggest that the amount received as a Subcontractor is not liable for the service tax. Mere assumption is not sufficient. It is not that the petitioner was guided by any opinion of an expert nor it is a case that the position of law was shaky or that petitioner was guided by some dictum of the Courts. It was merely an assumption without any sufficient cause. The same cannot be termed as a reasonable cause so as to invoke Section 80 of the Act. Penalty cannot be set aside - petition dismissed.

Summary

Issues:
1. Appeal against penalty imposed on petitioner.
2. Benefit of Section 80 as it stood then.
3. Proper presentation of petitioner's case before authorities.
4. Admissibility of liability on amount received as Subcontractor.
5. Invocation of Section 80 for penalty imposition.

Analysis:
1. The petitioner challenged the Tribunal's decision affirming the lower authorities' order, specifically focusing on the penalty imposed. The petitioner contended that they should benefit from Section 80 as it stood then.

2. The petitioner's advocate argued that the case was not effectively presented before the authorities, leading to a misunderstanding. The petitioner believed in good faith that the amount received as a Subcontractor was not taxable. When informed otherwise, the petitioner promptly paid the tax, demonstrating good faith.

3. On the other hand, the respondents' counsel supported the Tribunal's order, emphasizing the petitioner's admission of tax liability on the Subcontractor amount but failure to disclose it, leading to a misdeclaration.

4. The Tribunal found that the petitioner's failure to disclose the Subcontractor amount constituted a misdeclaration, precluding the invocation of Section 80. Section 80 required the assessee to prove a reasonable cause for the failure, which necessitated demonstrating reasonable grounds to believe the amount was not taxable. Mere assumption without expert opinion or legal uncertainty did not constitute a reasonable cause.

5. The Court concurred with the Tribunal's findings, stating that the petitioner's actions did not meet the criteria for invoking Section 80. The Court found no error in the Tribunal's decision and declined to interfere, disposing of the writ petition without costs.