2008 (3) TMI 92 - AT - Service Tax

Clerical mistake in two invoices where service tax was charged @ 5% instead of 8% - there is no suppression of value of the service - Commissioner of Service Tax on the ground that there is no willful suppression held that the respondents has sufficient reasonable ground for invoking provisions of Section 80, Hence penalty is not justified - contention of Revenue that reasonable cause means which is beyond the control of assessee has no merit order of commissioner is justified

Summary

Issues:
Appeal against non-imposition of penalty under Section 80 of Finance Act on grounds of reasonable cause.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi involved a challenge by the Revenue against an order where the Commissioner of Service Tax had held that the respondents had reasonable grounds for invoking Section 80 of the Finance Act, leading to the non-imposition of a penalty. The respondents were engaged in providing management consultancy services, and a show cause notice was issued for the imposition of a penalty. The adjudicating authority initially confirmed the demand but later invoked Section 80 of the Finance Act, citing the absence of willful suppression of the value of services provided by the respondents. Upon review, the Commissioner of Service Tax sided with the respondents, prompting the present appeal by the Revenue.

The main contention in the appeal was whether there existed a reasonable ground to invoke Section 80 of the Finance Act, and whether there was a reasonable cause beyond the control of the assessee that prevented compliance under normal circumstances. The Tribunal referred to a previous case, Real Mathematic Classes vs. CCE, Jaipur, where it was established that "reasonable cause" implies something reasonable to a person of ordinary care or prudence. The Tribunal rejected the Revenue's argument that reasonable cause must be beyond the control of the assessee, emphasizing that a clerical mistake in two invoices, where the service tax rate was incorrectly charged at 5% instead of the revised 8%, did not constitute suppression of the service value. Consequently, the Tribunal found no flaw in the order invoking Section 80 of the Finance Act and dismissed the appeal, concluding that there was no merit in challenging the decision.

In light of the detailed analysis and legal interpretation provided by the Tribunal, the appeal was ultimately dismissed, reaffirming the decision that the respondents had reasonable grounds for invoking Section 80 of the Finance Act, leading to the non-imposition of a penalty due to the absence of willful suppression and the clerical nature of the error in invoicing.