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2023 (12) TMI 76 - AT - Service TaxLevy of penalties - Failure to Pay Service Tax on receipt of Advance during the FY 2008-09 - Failure to on receipt of Advance on 15.11.2008 and on 15.03.2009 - Short payment of service tax in terms of Rule 6 of the Service Tax Rules, 1994 - Short payment of service tax during the period from 23.08.2006 to 27.03.2008 - HELD THAT - The entire service tax along with interest has been paid before issue of the Show cause Notice. Thus, as per Section 73(3) of the Finance Act, 1994, no need to issue show cause notice for this demand. Also, the department has not brought in any evidence on record to substantiate the allegation of fraud, collusion, suppression or misrepresentation of fact. Thus, extended period cannot be invoked in respect of these demands and hence no penalty imposable on this demand. Accordingly, the penalty imposed on these demands set aside. Short payment of Service tax during the period of FY 2006-07 and 2007-08 - demand occurred due to change in rate of duty - HELD THAT - The service was provided by the Appellant prior to change in rate of duty and Invoices have also been raised prior to change in rate of duty. The recovery of the amount after the change in the rate of duty does not mean that the revised rate would be applicable for the services rendered prior to the rate change. This view has been held in the case of Commissioner of Service Tax Vs. Consulting Engineering Services (I) Pvt. Ltd 2013 (1) TMI 434 - DELHI HIGH COURT - the demand confirmed by adopting the revised rate of duty is not sustainable. Non-payment of service tax during the period of FY 2007-08 for providing service as Subcontractor - HELD THAT - The adjudicating authority has relied on the Board circular 96/7/2007-ST dated 23.08.2007 wherein it has been clarified that sub-contractor is also liable to pay service tax even if the main contractor pays service tax. It is observed that this clarification was issued on 23.08.2007. Thus, on merit the submission of the Appellant, cannot be agreed upon. However, it is observed that prior to this clarification, there were confusion about the liability of sub-contractor to pay service tax when the main contractor pays service tax on the full value. Also, the service tax paid by the sub contractor would be available as credit to the main contractor. In this case the main contractors Simplex Project Limited and Tata Projects Limited have paid service tax on the full value - Further, the demand is hit by limitation. The demand in this case pertains to the period 2007-08 and the show cause notice was issued on 19.04.2011, beyond the normal period of limitation. The department has not brought in any evidence to substantiate the allegation of suppression. Thus, the demand is hit by limitation. Short payment of service tax during the period of FY 2007-08 - demand has arisen due to payment of service tax by the Appellant under composition scheme for the period of July 2007 to March 2008 and non-complying the Notification No. 32/2007 dated 22.05.2007 - HELD THAT - It is observed that no procedure has been laid down under the Rule and there is no statutory form for exercising the option for availing the composition scheme. In the absence of statutory format, the option can be exercised by paying the service tax equivalent to 2% of the gross amount charged for the works contract. Accordingly, the payment of an amount equivalent to 2% of the gross amount charged for the works contract implies that they have opted for the composition scheme. This view has been held by the Tribunal Mumbai in the case of ABL Infrastructure Private Limited v. Commissioner of Central Excise, Nashik 2015 (2) TMI 801 - CESTAT MUMBAI - the Appellant has exercised the option to avail the Composition Scheme for the period 2007-08. Accordingly, the demand confirmed in the impugned order along with interest and penalty is not sustainable. Appeal disposed off.
Issues Involved:
1. Failure to Pay Service Tax on receipt of Advance during the FY 2008-09. 2. Failure to Pay Service Tax on receipt of Advance on 15.11.2008 and on 15.03.2009. 3. Short payment of service tax in terms of Rule 6 of the Service Tax Rules, 1994. 4. Short payment of Service Tax during the period of FY 2006-07 and 2007-08. 5. Short payment of Service Tax during the period from 23.08.2006 to 27.03.2008. 6. Non-payment of Service Tax during the period of FY 2007-08 for providing service as Subcontractor. 7. Short payment of Service Tax during the period of FY 2007-08 due to Availing Composition Scheme. Summary: 1. Failure to Pay Service Tax on receipt of Advance during the FY 2008-09: The Appellant had paid the service tax along with interest before the issuance of the Show Cause Notice (SCN). According to Section 73(3) of the Finance Act, 1994, no SCN should have been issued, and hence, no penalty should be imposed. The Tribunal set aside the penalty imposed on this demand. 2. Failure to Pay Service Tax on receipt of Advance on 15.11.2008 and on 15.03.2009: Similar to the first issue, the Appellant paid the service tax and interest before the SCN was issued. The Tribunal held that the extended period cannot be invoked, and no penalty is imposable. The penalty was set aside. 3. Short payment of service tax in terms of Rule 6 of the Service Tax Rules, 1994: The Appellant paid the service tax before the issuance of the SCN. The Tribunal ruled that no SCN should have been issued, and no penalty is imposable. The penalty was set aside. 4. Short payment of Service Tax during the period of FY 2006-07 and 2007-08: The demand arose due to a change in the rate of duty. The Tribunal observed that the service was provided and invoices were raised before the change in the rate of duty. Following the decision in Commissioner of Service Tax Vs. Consulting Engineering Services (I) Pvt. Ltd, the Tribunal held that the demand confirmed by adopting the revised rate of duty is not sustainable. The demand, interest, and penalty were set aside. 5. Short payment of Service Tax during the period from 23.08.2006 to 27.03.2008: The Appellant paid the service tax and interest before the issuance of the SCN, but it was not considered in the SCN. The Tribunal ruled that the extended period cannot be invoked, and no penalty is imposable. The penalty was set aside. 6. Non-payment of Service Tax during the period of FY 2007-08 for providing service as Subcontractor: The Appellant argued that the principal contractors had paid the service tax, and hence, no demand can be imposed on the sub-contractor. The Tribunal noted that the demand is hit by limitation as the SCN was issued beyond the normal period of limitation, and there was no evidence of suppression. The demand, interest, and penalty were set aside. 7. Short payment of Service Tax during the period of FY 2007-08 due to Availing Composition Scheme: The demand arose due to non-compliance with Notification No. 32/2007 dated 22.05.2007. The Tribunal observed that the Appellant had intimated the department regarding payment under the composition scheme. Citing the decision in ABL Infrastructure Private Limited v. Commissioner of Central Excise, Nashik, the Tribunal held that the payment of 2% of the gross amount charged implies opting for the composition scheme. The demand, interest, and penalty were set aside. Order: (i) Penalties imposed under Section 78 of the Finance Act, 1994, for demands (a), (b), (c), and (e) are set aside. (ii) Demands (d), (f), and (g) along with interest and penalty are set aside. (iii) The impugned order is modified accordingly. (Order pronounced in the open court on 30.11.2023.)
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