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2023 (12) TMI 1065 - AT - Service TaxPenalty u/s 78 of the Finance Act, 1994 - Service Tax along with the interest is paid by the assessee on commission income before issuance of SCN - Classification of services - income booked as godown rent - Renting of Immovable Property Service (RIPS) or not. Whether penalty is imposable under Section 78 of the Finance Act, 1994 when service tax along with interest thereon has been paid before issue of the SCN and whether further penalty of Rs.5,000/- imposable under Section 77 of the Finance Act, 1994? - HELD THAT - The Appellant has deposited the Service Tax of Rs.4,05,205/- along with interest of Rs.1,30,876/- on 25.02.2009 without raising any dispute. In terms of Section 73(3) of the Finance Act, 1994, where the Service Tax along with the interest is paid by the assessee on the basis of tax ascertained by the Central Excise Officer, no SCN is required to be served - this view has been held by this Tribunal in the case of M/S. NATIONAL POWER ENGINEERING COMPANY VERSUS COMMISSIONER OF CGST CENTRAL EXCISE, SILIGURI COMMISSIONERATE 2023 (7) TMI 361 - CESTAT KOLKATA - imposition of penalty under Section 78 of the Finance Act, 1994 is not warranted in this case - the penalty imposed under Section 78 is set aside. Whether Service Tax of Rs.34,865/- is payable under the category of Renting Immovable Property Services (RIPS) during the period 2007-08 2008-09 for the amount shown as 'godown rent' in the balance sheet? - HELD THAT - From the rate payable by ICICI bank as per the agreement mentioned above, it is evident that the land has been used for parking of the vehicles by ICICI bank. Accordingly, the Appellant are entitled for the exemption provided under Clause (c) of Explanation 1 to Section 65(105) (zzzz) of the Finance Act, which specifically excludes the land used for parking purposes from levy of service tax under the category of RIPS. Accordingly, the demand of Rs.34,865/- confirmed along with interest and penalty in the impugned order is not sustainable and the same is set aside. Penalty imposed under section 77 of the Finance Act - HELD THAT - It is observed that the penalty was imposed for non registration and not filing the returns and non-payment of the tax in time - the Appellant has been filing returns regularly. The demand confirmed in the impugned order has been held as not sustainable. In view of the above, the penalty under Section 77 is not imposable and accordingly the same is set aside. The impugned order set aside - appeal allowed.
Issues involved:
The judgment involves two main Issues: (i) Imposition of penalty under Section 78 of the Finance Act, 1994 when service tax along with interest has been paid before the issuance of Show Cause Notice (SCN) and whether further penalty of Rs.5,000/- is imposable under Section 77 of the Finance Act, 1994. (ii) Whether Service Tax of Rs.34,865/- is payable under the category of Renting Immovable Property Services (RIPS) for the income shown as 'godown rent' in the balance sheet during the period 2007-08 & 2008-09. Issue (i) - Penalty under Section 78: The Appellant had paid the Service Tax along with interest without raising any dispute before the SCN was issued. Citing Section 73(3) of the Finance Act, 1994, it was argued that penalty is not imposable in such cases. The Tribunal referred to a previous decision and held that imposition of penalty under Section 78 is not warranted. Therefore, the penalty under Section 78 was set aside. Issue (ii) - Demand of Service Tax: The Appellant earned income by letting out land to ICICI Bank for parking repossessed vehicles, recorded as 'godown rent'. The Authorities classified this income under RIPS for service tax levy. However, the exclusion of land used for parking from the definition of immovable property was not considered in the impugned order. The Tribunal examined the agreement with ICICI Bank, which indicated rates for parking vehicles. It was concluded that the land was used for parking, entitling the Appellant to exemption under the Finance Act. Therefore, the demand of Rs.34,865/- was deemed unsustainable and set aside. Penalty under Section 77: A penalty of Rs.5000/- was imposed under Section 77 for non-registration, late filing of returns, and non-payment of tax on time. However, since the demand was found unsustainable, the penalty under Section 77 was also set aside as the Appellant had been filing returns regularly. In conclusion, the impugned order was set aside, and the appeal filed by the Appellant was allowed.
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