2019 (7) TMI 958 - AT - Service Tax

Non-payment of service tax - Manpower Recruitment Service and Commercial and Industrial Construction Service - service tax collected but had not deposited to Department which is also accepted by the proprietor of the appellant - suppression of facts nor not - demand of interest and penalty - waiver to penalty in terms of Section 80 of the Act - HELD THAT - This is the case where the service tax amount has been collected by the appellant but had not deposited to Department which is also accepted by the proprietor of the appellant. The appellant has paid substantial amount of service tax during the investigation and agreed to pay the balance amount to the Department. It was submitted by the appellant that the service tax registration was not taken by them initially under the bona fide belief that they are not required collect and pay the service tax from the recipient of the service provided, that is Manpower Recruitment Service and Commercial and Industrial Construction Service . Having realised the mistake the appellant obtained the service tax registration from the Department on 07/01/2010 and started paying the service tax partially as indicated in the Show Cause Notice and in the impugned order. We also find that even after obtaining the service tax registration the appellant has not duly discharged the applicable service tax on the services provided by them and also failed to file ST-3 returns in time. The non-payment of service tax has come to light after the investigation conducted by the Department. Accordingly, the appellant has deliberately suppressed the relevant facts from the Department with sole intention to evade the payment of service tax and, therefore, the impugned order has correctly invoked. The provisions of 73 (1) of the Act. Appeal dismissed - decided against appellant.

Summary

Issues:
- Confirmation of demand for service tax along with penalties and interests for the period 2008-09 to 2011-12.
- Applicability of extended period of limitation.
- Imposition of penalties under various sections of the Act.
- Claim for waiver of penalty under Section 80 of the Act.
- Interpretation of balance sheet for quantification of service tax.
- Non-payment of service tax by the appellant.

Confirmation of Demand for Service Tax:
The appellant, engaged in providing taxable services, failed to pay appropriate service tax despite collecting it from clients. Investigations revealed non-payment of service tax to the government exchequer, leading to a demand of &8377; 64,25,449/- confirmed against the appellant for the period 2008-09 to 2011-12. The appellant admitted liability during investigations, acknowledging non-payment and lack of proper documentation. The appellant made partial payments during proceedings, but the adjudicating authority confirmed the demand.

Applicability of Extended Period of Limitation:
The appellant contested the invocation of the extended period of limitation, arguing a bona fide belief regarding non-liability to pay service tax on certain amounts. However, the adjudicating authority upheld the extended period, citing deliberate suppression of facts by the appellant. The show cause notice issued more than four years after the relevant period was deemed valid due to the appellant's failure to pay service tax despite collection.

Imposition of Penalties:
Penalties under various sections of the Act were imposed by the adjudicating authority, which the appellant challenged. The appellant argued against penalties under Sections 76, 77, 78, and Rule 15 of Cenvat Credit Rules, claiming no deliberate defiance of law. The appellant also sought waiver under Section 80 of the Act, but the authority upheld the penalties, finding the appellant's actions intentional.

Interpretation of Balance Sheet and Non-Payment of Service Tax:
The appellant's defense, based on the interpretation of the balance sheet for quantifying service tax, was refuted. The appellant's reliance on case laws was deemed inapplicable to the situation where service tax was collected but not deposited. The appellant's failure to adhere to tax payment and filing requirements, despite obtaining registration, was noted. The appellant's actions were considered deliberate suppression of facts to evade service tax payment, justifying the penalties imposed.

Conclusion:
The Tribunal upheld the impugned order, dismissing the appeal. The appellant's failure to pay service tax, despite collection, and the deliberate suppression of facts were key factors in confirming the demand and penalties. The appellant's arguments regarding extended limitation, penalties, and waiver were rejected, emphasizing the intentional non-compliance with tax obligations.

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