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2022 (6) TMI 206 - AT - Service TaxLevy of penalty u/s 78 of FA - wrongful interpretation on levy of tax under Section 66E(e) - concealment of facts or not - HELD THAT - There is no case of concealment or contumacious conduct on the part of the appellant. Further, it is found that levy of service tax in the facts of the present case under Section 66E(e), is a matter of interpretation. Further on audit objection, the appellant have accepted the same and deposited the tax alongwith interest. In this view of the matter, it is found that no penalty is imposable under Section 78. Penalty set aside - appeal allowed - decided in favor of appellant.
Issues: Penalty under Section 78
The issue in this appeal was whether the penalty under Section 78 was rightly imposed. The appellant had shown income for Low Volume Compensation and cash discount in their balance sheet, which was considered as Declared Service under Section 66E(e) of the Finance Act, chargeable to Service Tax. The appellant deposited the tax on Low Volume Compensation but contested the tax on cash discount. A show cause notice was issued proposing recovery of Service Tax and interest, along with the imposition of penalty under Section 78. The adjudicating authority confirmed the demand and imposed an equal penalty. The appeal was filed before the Commissioner (Appeals), who dropped the demand related to the cash discount but confirmed the penalty for alleged non-payment of service tax on Low Volume Compensation. The appellant argued that they recorded the transaction in their books and deposited the tax upon audit pointing it out. The appellant relied on Section 73(3) of the Finance Act, stating that if tax is deposited upon self-ascertainment or upon pointing by the officer, no notice shall be served. The appellant contended that the penalty under Section 78 should be set aside. After considering the arguments, the Member (Judicial) found that there was no concealment or contumacious conduct by the appellant. The levy of service tax under Section 66E(e) was a matter of interpretation, and the appellant had accepted the audit objection and deposited the tax with interest. Therefore, the Member concluded that no penalty was imposable under Section 78. The appeal was allowed, and the penalty was set aside.
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