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2023 (7) TMI 59 - AT - Service TaxLevy of Service Tax - service tax liability as a receiver of service, since the service provider Newsco had an office in Mumbai - suppression of facts or not - extended period of limitation - levy of penalty u/s 77 and 78 of the Finance Act 1994 - HELD THAT - The entire issue of service provided by Newsco to the Appellant was within the knowledge of the department. The Appellant was in correspondence with the department and informed the department about the payment of service tax by them vide letter dated 11.12.2009. Thus, it is found that there was no suppression involved in this case. Since the entire service tax along with interest was paid, there was no need to issue the Notice as provided in Section 73(3) of the Finance Act. Thus, the Notice issued by invoking extended period is bad in law and it cannot be sustained. The adjudicating authority went ahead and adjudicated the Notice and imposed penalties under section 77 and 78 of the Finance Act 1994. As there was no suppression involved and there was no intention to evade payment of service tax, penalty under Section 78 of the Finance Act, 1994, not imposable in this case. As there was no violation of provisions of Section 77, no penalty imposable under this section. In the case of ORISSA BRIDGE CONSTRUCTION CORPN. LTD. VERSUS CCE., BHUBANESWAR 2008 (8) TMI 585 - SUPREME COURT , it has been held that Agree with the finding recorded by the Tribunal that the activities carried out by the appellant amount to manufacture of the goods. There was no suppression involved in this case. Accordingly the penalties imposed on the Appellant under Sections 77 and 78 of the Finance, 1994 set aside - appeal allowed.
Issues:
The issues involved in this case are whether the Appellant is liable to pay service tax for services rendered by Newsco, whether the extended period of limitation can be invoked, and whether penalties under sections 77 and 78 of the Finance Act are imposable. Service Tax Liability: M/s Oil and Natural Gas Ltd (ONGC) entered into a contract with Newsco for Mining Services. The Appellant believed they were liable to pay service tax as Newsco had an office in Mumbai. Despite paying the service tax, the department issued a Show Cause Notice demanding service tax, interest, and penalty. The Appellant contended that there was no service tax liability on them as the service provider had an office in Mumbai and had paid the service tax. The Tribunal observed that the Appellant had paid the service tax in good faith, and the Notice invoking the extended period of limitation was unjustified. Extended Period of Limitation: The department issued a Notice invoking the extended period of limitation after the Appellant had already paid the service tax. The Commissioner confirmed the service tax and imposed penalties. The Appellant argued that there was no suppression and the Commissioner did not provide grounds for invoking the extended period. The Tribunal held that since the Appellant had informed the department about the payment of service tax and there was no suppression, penalties under sections 77 and 78 were not imposable. Precedents and Decisions: The Appellant relied on various decisions to support their contention, including cases such as Orissa Bridge & Construction Corporation Ltd, Gammon India Ltd, Shree Alloys Industries, and Lovely Food Industries. These decisions highlighted the importance of timely issuance of Show Cause Notices and the implications of delay in invoking the extended period of limitation. The Tribunal considered these precedents and held that the penalties imposed on the Appellant were not justified. Conclusion: The Tribunal found that there was no service tax liability on the Appellant, as the service provider had an office in Mumbai and had paid the tax. The Notice issued by invoking the extended period of limitation was deemed unjustified, and penalties under sections 77 and 78 were set aside. Citing relevant legal precedents, the Tribunal allowed the appeal filed by the Appellant and waived all penalties under section 80 of the Finance Act, 1994. (Order pronounced in the open court on 28 June 2023.)
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