2015 (3) TMI 40 - AT - Service Tax

Penalty u/s 76, 77 & 78 - Willful suppression of facts - Demand of differential duty - Held that - Show-cause notice was issued to the appellant for larger amount but after reconciliation, the amount came down to ₹ 4,22,703/- Further the figure shown in the balance sheet are on the basis of receivable basis and during the impugned period, service tax required to be paid on receipt basis. Therefore, it cannot be termed in the facts and circumstances of the case, that the appellant was having a malafide intention to suppress true facts to ascertain the service tax liability. Although the appellant has not disputed the service tax liability which have been paid along with interest, it cannot be said that the appellant are having malafide intention. In these circumstances, appellant are entitled for immunity under Section 80 of the Act. Accordingly, I set aside the penalty imposed on the appellant by giving the benefit of Section 80 of the Finance Act, 1994. In these terms, penalties are waived, the demand of service tax along with interest are confirmed - Decided partly in favour of assessee.

Summary

Issues:
Appeal against penalty under Sections 76, 77 & 78 of the Finance Act, 1994. Entitlement for immunity under Section 80 of the Finance Act, 1994.

Analysis:
The appellant, engaged in providing services, maintained separate units with consolidated financial records. An audit revealed discrepancies in service tax payment compared to the balance sheet. The Adjudicating Authority determined a sum payable as service tax, which the appellant paid along with interest. However, penalties were imposed under the Finance Act, 1994. The Commissioner (Appeals) upheld the penalties. The appellant sought immunity under Section 80 of the Act, arguing that discrepancies were unintentional due to differing bases for tax calculation. The appellant contended that they paid tax based on consolidated accounts, not willfully suppressing facts. The respondent argued that the appellant's admission of liability and payment demonstrated mens rea, justifying the penalties.

Upon hearing both sides, the Tribunal noted the initial discrepancy in the show-cause notice, which reduced after reconciliation. The balance sheet figures were based on receivable basis, while tax was payable on a receipt basis during the relevant period. Considering the circumstances, the Tribunal found no malafide intention on the appellant's part to suppress facts regarding tax liability. Despite not disputing the liability and paying with interest, the appellant's actions did not indicate malafide intent. Consequently, the Tribunal granted immunity under Section 80 of the Finance Act, 1994, setting aside the imposed penalties. The Tribunal waived the penalties but confirmed the service tax demand along with interest.

Therefore, the judgment granted immunity to the appellant under Section 80 of the Finance Act, 1994, based on the lack of malafide intention in the discrepancies, setting aside the penalties while confirming the service tax demand with interest.