2014 (2) TMI 147 - AT - Service Tax

Imposition of penalty - Commissioner reduced the amount of penalty - Held that - appellant is not disputing the tax liability. However, he is seeking abatement towards the tax from the total consideration received; however, there is no documentary evidence available on record to show that the amount received by the appellant was cum tax. In the absence of such a documentary evidence it is difficult to accept the submission of the appellant that consideration received should be treated as cum tax. Discretion was available to the appellate authority only within the minimum value and the maximum value and there was no discretion given to the authority under the law for reducing the penalty - reduction in penalty by the lower authority below the minimum prescribed is not sustainable in law. Consequently, the appellant would be liable to pay penalty equal to the service tax demand confirmed in the order of the adjudicating authority - Decided in favour of Revenue.

Summary

Issues:
Appeal against Order-in-Appeal on demand confirmation, penalty reduction, cum tax treatment, and penalty waiver.

Demand Confirmation and Penalty Reduction:
The appeals challenged Order-in-Appeal No.RKR(113)54/2007 confirming a demand of Rs.11,23,798 with reduced penalty of Rs.4,50,000 on M/s. Rudra Galaxy Channel Ltd. The appellant did not dispute the tax liability but sought cum tax treatment for consideration received. The Revenue appealed, arguing that the penalty reduction below the minimum prescribed was incorrect. The appellate authority had no discretion to reduce the penalty below the minimum or above the maximum limits set by law. Despite multiple opportunities, the appellant did not appear for the hearing. The reduction in penalty was deemed unsustainable in law, and the appellant was held liable to pay penalty equal to the service tax demand confirmed.

Cum Tax Treatment:
The appellant claimed abatement towards service tax from the total consideration received, arguing it should be treated as cum tax. However, there was no documentary evidence to support this claim. The absence of such evidence made it challenging to accept the appellant's submission. Citing the decision in Amrit Agro Industries Ltd. case, it was established that without proof that the price includes the tax payable, cum-tax benefit cannot be granted. The lack of documentary evidence led to the rejection of the plea for cum tax treatment. The appellant's argument was not deemed valid without supporting documentation.

Penalty Waiver:
The appellant also sought a waiver of the penalty imposed. However, the law at the relevant time mandated a minimum penalty equal to the service tax demand confirmed and a maximum penalty of twice that amount. The appellate authority had no discretion to reduce the penalty below the minimum prescribed. Relying on the decision in the case of UOI vs. Shiv Ratan Advertisers, it was concluded that the penalty reduction below the minimum limit was not sustainable in law. As a result, the appeal filed by M/s. Rudra Galaxy Channel Ltd. was rejected, and the appeal filed by the Revenue was allowed.

This detailed analysis of the judgment highlights the key issues of demand confirmation, penalty reduction, cum tax treatment, and penalty waiver, providing a comprehensive overview of the legal proceedings and decisions made by the Appellate Tribunal CESTAT MUMBAI.