2021 (9) TMI 356 - AT - Service Tax

Levy of penalty - non-payment of service tax - reverse charge basis - GTA services - commission to foreign entity - service tax was paid on being pointed out - malafide intent present or not - HELD THAT - The appellant has paid the service tax as soon as it was pointed by the auditor and again in cash when it was pointed out that it has to be paid in cash. In these circumstances, there are no malafide on the part of the appellant. Therefore, benefit of section 80 should be extended for the appellant and penalty under section 76 and 78 are set aside. The appellant have already conceded that they are not contesting the payment of duty. Demand of service tax - reverse charge basis - commission to a foreign entity - levy of penalty - HELD THAT - The period is prior to introduction 66A when the duty is not leviable. In this circumstance, there are no justification in imposition of penalty under section 76, 77 and 78. The penalty imposed under section 76, 77 and 78 are set aside. The appellant has already conceded that they are not contesting payment of duty. The appellant has however conceded payment of penalty under section 77 in respect of first charge. Appeal allowed in part.

Summary

Issues:
1. Payment of service tax on reverse charge basis for GTA services.
2. Demand of service tax on reverse charge basis for commission paid to a foreign entity.

Analysis:
1. The first issue pertains to the payment of service tax on reverse charge basis for GTA services received by the appellant. The appellant initially discharged the duty liability through Cenvat credit and later in cash upon the revenue's insistence. The appellant claimed the benefit of section 73(3) of the Finance Act, 1994, which the revenue denied citing its introduction post the disputed period. The appellant argued that section 73(3) was clarificatory, relying on the decision in the case of M/s SKY AUTOMOBILES. The tribunal found no malafide on the appellant's part and extended the benefit of section 80, setting aside penalties under sections 76 and 78, as the duty payment was not contested.

2. The second issue concerns the demand of service tax on reverse charge basis for commission paid to a foreign entity during a period before the introduction of section 66A when the levy was not applicable. The appellant highlighted the confusion in the trade regarding the duty's leviability during that period. The appellant did not seek a refund of duty but requested the setting aside of penalties imposed under sections 76 and 78. The tribunal agreed that penalties under sections 76, 77, and 78 were not justified in this scenario and set them aside. The appellant accepted the payment of penalty under section 77 for the first charge.

In conclusion, the tribunal partly allowed the appeal, granting relief to the appellant on both issues by setting aside penalties under sections 76 and 78 and acknowledging the payment of duty without contest.