2019 (8) TMI 1375 - AT - Service Tax

Penalty u/s 78 - failure for payment of service tax - failure to take registration - Business Auxiliary Service - commission Agent in promotion and marketing of services of holidays option - Denial of Cum-Tax benefit - extended period of limitation - HELD THAT - The appellant failed to file ST-3 Returns and did not follow the procedure under chapter 5 of the Finance Act 1994 and rules made there under - also the ignorance of law is not excusable in tax law and a person who is unaware of law cannot escape liability. This being the facts and evidence of record it can very well be said that ingredients of the penal provision contained in section 78 of the Finance Act, is not made out against appellant to impose equivalent penalty on him. Cum-tax benefit - HELD THAT - The leaf-let of PCL containing terms of payment of commission to its Agents, one can invariably reach at the conclusion that the commission amount received by the appellant was inclusive of the service tax, for which the appellant is entitled to get cum tax benefit for the two subsequent periods i.e. for 2012-13 and 2013-14. Appeal allowed in part. Appeal allowed in part.

Summary

Issues: Imposition of equivalent penalty and denial of Cum-Tax benefits by Commissioner (Appeals)

Imposition of Equivalent Penalty:
The appellant, engaged in providing Business Auxiliary Service, was found to have not discharged service tax liability despite exceeding the small scale exemption limit and not obtaining service tax registration. Show cause cum demand notices were issued covering the period 2007-08 to 2013-14, proposing recovery of service tax, interest, and imposition of penalty. The appellant contested before the adjudicating authority and Commissioner (Appeals) but only obtained relief in certain aspects. The appellant argued that the tax was collected by another entity and paid before the commission was released, justifying the payment of duty with cum tax benefit. The appellant highlighted cases where similar penalties were set aside by the Tribunal, emphasizing the absence of evidence to show intent to evade tax. The Authorized Representative for the Respondent Department supported the order passed by the Commissioner (Appeals), stating that tax evasion could not have been noticed without investigation.

Denial of Cum-Tax Benefits:
The Commissioner (Appeals) confirmed the imposition of penalty under section 78 of the Finance Act, citing the appellant's failure to file ST-3 Returns and non-compliance with tax procedures. The Commissioner held that ignorance of the law is not excusable in tax matters. However, upon examination of the case record and the terms of payment of commission to the Agents by the principal assessee, it was concluded that the commission received by the appellant was inclusive of service tax. Drawing on previous rulings, it was determined that the appellant was entitled to cum tax benefit for the subsequent periods of 2012-13 and 2013-14. Consequently, the order passed by the Commissioner (Appeals) imposing penalty under section 78 and denying Cum-Tax benefits was set aside.

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