2020 (2) TMI 1117 - AT - Service Tax

Imposition of penalty and interest - Failure to discharge Service Tax - Business Auxiliary Service - demand pertains to 2009-10 and 2010-11 - HELD THAT - Similar issue decided in the case of SMT. KUSUM LATA DAMANI VERSUS CCE CGST, DELHI 2019 (3) TMI 1723 - CESTAT NEW DELHI where it was held that the appellant is a lady and not much conversant with the service tax laws. However, she has maintained proper records of the receipt of sales commission by cheque, duly disclosed in the Income Tax record. Thus, there is no case of deliberate defiance of law or contumacious conduct as mis-statement of facts, and penalty set aside - the case at hand is identically same, and therefore, there is no justification in imposition of penalty on the appellant. Demand of interest - HELD THAT - The same is required to be recomputed under Proviso to Section 75 of the Act by the original adjudicating authority. Accordingly, the matter remanded to the lower adjudicating authority for the limited purpose of calculating the interest as applicable in this case. Appeal allowed in part and part matter on remand.

Summary

Issues:
Reduction of service tax demand under Section 73, interest liability calculation, penalty under Section 78 imposition.

Reduction of Service Tax Demand under Section 73:
The appellant, a small-time service provider, received commission for "Business Auxiliary Service" but failed to discharge applicable service tax. The demand was confirmed by the lower Adjudicating Authority based on a show cause notice. However, the Commissioner (Appeal) reduced the demand for the years 2009-10 and 2010-11 due to quantification errors in the notice. The appellant argued being unaware of service tax laws as their gross receipts never exceeded the exemption limit. The Commissioner's decision to reduce the demand was upheld.

Interest Liability Calculation:
The interest was levied at the normal rate under Section 75 of the Finance Act. The appellant argued for a reduction in interest as per the proviso to Section 75 since their turnover was below sixty lakhs. The appellant provided rates applicable for interest in various financial years as per a Government of India notification. The Tribunal referred to a similar case where reduced interest was allowed and concluded that the appellant was entitled to a reduced rate of interest. The matter was remanded for the original adjudicating authority to recalculate the interest accordingly.

Penalty under Section 78 Imposition:
The Authorized Representative argued for sustaining the penalty under Sections 77 and 78, stating that the appellant failed to discharge the service tax liability, justifying the penalty. However, the Tribunal referred to a previous case where the penalty was set aside for a similar situation. The Tribunal found no justification for imposing a penalty on the appellant and set aside the penalties under Sections 77 and 78 of the Finance Act.

In conclusion, the Tribunal upheld the reduction of service tax demand, allowed for a reduced rate of interest, and set aside the penalties imposed under Sections 77 and 78. The matter was remanded for the recalculation of interest by the original adjudicating authority. The appeal was disposed of accordingly.