2022 (5) TMI 799 - AT - Service Tax

Short payment of service tax - outdoor catering service - abatment of 30% (for goods component), as per notification no. 30/2012-ST - HELD THAT - There was no dispute with regard to the gross bill raised by the appellant-assessee, as proposed in the SCN. The Appellant had taken a point of law that being eligible under the notification, they have availed abatement of 30% with respect to outdoor catering services under Notification no. 30/2012-ST, which has not been found to be wrong. Accordingly, this demand is set aside and the ground is allowed in favour of the appellant-assessee. Short payment of service tax - renting of immovable property - availment of abatement of 40% erroneously - HELD THAT - The mistake is bona fide as it is not the case that appellant have collected more tax but have deposited less tax. The learned Counsel admits that the liability of Rs. 22,824 and undertakes to pay the same, if not paid alongwith interest as applicable. Levy of penalty u/s 70 r/w Rule 7C of Service Tax Rules - late filing of returns, during period 2014-15 to 2017-18 (up to June 2017) - HELD THAT - As per para 15 of the order-in-original, the delay is computed wherein it is from 4 days to 256 days, the penalty have been imposed penalty at varying rates from Rs. 300 to Rs. 20,000/-. Learned Counsel states that the delay has been caused due to the circumstances beyond the control and there is no deliberate default. Relying on the ruling of this Tribunal in the case of M/S VIM COATS VERSUS COMMISSIONER OF CENTRAL EXCISE 2014 (8) TMI 365 - CESTAT AHMEDABAD , urges that the penalty may be reduced appropriately - the amount of penalty for the return period October 2016 to March 2017, is reduced from Rs. 20,000/- to Rs. 2000/- and for the period April 2017 to June 2017 from Rs. 14,900/- to Rs. 1,400/-. Further, penalty under Section 70 for other returns is not interfered with. Levy of interest for short payment of service tax - Section 75 of the Finance Act - HELD THAT - The said amount is set aside by way of remand with direction to the adjudicating authority to re-compute the amount of interest payable, after adjustment of any amount lying to the credit. If any balance is payable, the same shall be paid by the appellant-assessee. In case, any amount is found to be paid excess, the appellant have been entitled to refund as per rules. Penalty under Section 78 is set aside under the facts and circumstances there being no deliberate avoidance of tax or contumacious conduct, the penalty under Section 78 is set aside. Appeal allowed in part and part matter on remand.

Summary

Issues:
1. Short payment of service tax for outdoor catering service.
2. Short payment of service tax for renting of immovable property.
3. Penalty for late filing of returns.
4. Levy of interest for short payment of service tax.

Analysis:

1. Short Payment of Service Tax for Outdoor Catering Service:
The appellant contested the demand of Rs. 1,88,003 for short payment of service tax for outdoor catering service. The appellant argued that they had availed a 30% abatement under Notification no. 30/2012-ST on the gross amount of services provided, which was not considered by the Commissioner (Appeals). The Tribunal found the Commissioner's observation to be legally flawed as there was no dispute regarding the gross bill raised by the appellant. The demand was set aside in favor of the appellant as they had correctly availed the abatement, and the ground was allowed.

2. Short Payment of Service Tax for Renting of Immovable Property:
Regarding the demand of Rs. 22,824 for short payment of service tax on renting of immovable property, the appellant admitted the error in taking a 40% abatement instead of paying tax on 100% of the receipts. The appellant acknowledged the liability and undertook to pay the amount along with applicable interest. The mistake was considered bona fide as the appellant had not collected more tax but had deposited less. The Tribunal accepted the admission of liability and directed the appellant to pay the outstanding amount.

3. Penalty for Late Filing of Returns:
The issue of imposing a penalty of Rs. 38,100 for late filing of returns was addressed by the Tribunal. The appellant argued that the delay was due to circumstances beyond their control and cited a precedent to support a reduction in the penalty amount. The Tribunal, considering the circumstances, reduced the penalty for specific return periods from Rs. 20,000 to Rs. 2000 and from Rs. 14,900 to Rs. 1,400. However, the penalty for other return periods remained unchanged, as there was no interference in those cases.

4. Levy of Interest for Short Payment of Service Tax:
The Tribunal remanded the issue of levying interest of Rs. 47,795 for short payment of service tax back to the adjudicating authority. The direction was to re-compute the interest payable after adjusting any credit balance. If any excess payment was found, the appellant was entitled to a refund as per rules. The appeal was allowed with consequential benefits, and the penalty under Section 78 was set aside due to the absence of deliberate tax avoidance or contumacious conduct.

In conclusion, the appeal was allowed in part, with decisions favoring the appellant on the issues of short payment of service tax for outdoor catering service and the penalty for late filing of returns. The appellant was directed to pay the outstanding amount for the short payment of service tax on renting immovable property, and the interest calculation was remanded for re-computation.