2015 (5) TMI 703 - AT - Service Tax

Architectural services - Receipt of professional fees - Failure to provide details of fees received - appellant were not collecting and paying service tax on the value of taxable services - Held that - Appellant having discharged the service tax liability and the interest thereof, before the due date as was granted by the Hon ble High Court of Bombay and two other petitioners who were rendering the same services are entitled for the relief as granted by the Hon ble High Court., i.e. no penalty be imposed on them. We do not find any reason to deny the relief of setting aside of penalties. We also find strong force in the contention raised by the learned Chartered Accountant having discharged the entire tax liability and the interest thereof in the first place, revenue should not have issued show-cause notice to the appellant. We find that justifiable cause is made out by the appellant for setting aside the penalties imposed on him under Section 76 & 78 of the Finance Act, 1994. Accordingly, invoking the provisions of Section 80 of the Finance Act, 1994 we set aside the penalties imposed on the appellant under this head. Appellant is not able to explain why there are no bill numbers and the description in the bills also do not have any details to come to a conclusion that the architectural services were rendered by the appellant prior to 16/10/98. In all probabilities, few of the bills which were raised before 16/10/98 could also be for the services rendered after 16/10/98. In the absence of any concrete evidence that services were rendered before 16/10/98. We are of the considered view, that appellant has not made out any case in his favour as regards the service tax liability of ₹ 7,83,241. Appellant could have entertained a bonafide belief that the services rendered by him being prior to 16/10/98, the payments received for such services after the date, are not liable for service tax. Accordingly, invoking the provisions of Section 80, we set aside the penalties imposed on the appellant under this head. - Decided partly in favour of assessee.

Summary

Issues:
1. Disputed arrears of service tax payment
2. Service tax liability on bills raised before 16/10/98
3. Incorrectly computed service tax liability

Disputed Arrears of Service Tax Payment:
The appellant had paid service tax of Rs. 24,43,782 before the show-cause notice was issued. The High Court had granted time until 31/05/2001 to discharge the tax liability without penalty. The Tribunal found that the appellant had complied with this directive and should not be penalized. The penalties under Section 76 & 78 of the Finance Act, 1994 were set aside as the appellant had paid the tax and interest before the due date set by the High Court. The Tribunal invoked Section 80 of the Finance Act, 1994 to support its decision to waive the penalties.

Service Tax Liability on Bills Raised Before 16/10/98:
The appellant claimed that certain bills totaling Rs. 7,83,241 were for services rendered before 16/10/1998 and thus not subject to service tax. However, the Tribunal noted that the appellant failed to provide concrete evidence that these services were indeed rendered before the taxable period. As a result, the Tribunal upheld the service tax liability of Rs. 7,83,241 along with interest. The appellant had pre-deposited the entire service tax liability and an additional amount, which was to be adjusted accordingly.

Incorrectly Computed Service Tax Liability:
Regarding the incorrectly computed service tax liability of Rs. 91,444, the Tribunal found that the revenue authorities had erred in calculating the tax based on the amount received by the appellant. The Tribunal clarified that the received amount should be considered as a cum tax amount, leading to the dismissal of the demand for service tax of Rs. 91,444. Consequently, interest and penalties related to this demand were also set aside.

In conclusion, the Tribunal disposed of the appeal by setting aside penalties for the disputed arrears of service tax payment, upholding the service tax liability on bills raised before 16/10/98, and dismissing the incorrectly computed service tax liability. The appellant's compliance with tax payments and the specific circumstances surrounding each issue were crucial factors in the Tribunal's decision-making process.