2015 (6) TMI 783 - AT - Service Tax

Extended period of limitation - Penalty u/s 78 - share broking services - Held that - No case of contumacious conduct and/or deliberate default of provisions of Act or Rules is made out against the assessee. The transactions have been found to be duly recorded in the Books of Account, as found by the Audit party. Further, the appellants have immediately applied for amendment to registration certificate pursuant to Audit showing willingness to pay for difference in balance-sheet and ST-3 returns. Further, it is seen that after grant of amended certificate of registration have deposited Service Tax under the new head of classification immediately. Further, in the impugned order, the learned Commissioner (Appeals) have found certain amounts as not taxable under the head Management Consultant Service and have also found that the assessee is entitled to cum tax benefit as Service Tax has not been charged separately in the bills raised for underwriter s service, which escaped tax. In this view of the matter, I hold neither extended period of limitation is attracted nor any penalty is imposable under Section 76 or 78. Upholding the impugned order in part, I further set aside the penalty under Section 78 as imposed in the impugned order. - Decided in favour of assessee.

Summary

Issues:
- Cross appeal against impugned order dated 6.5.2011 by Commissioner (Appeals), Central Excise, Mumbai-I regarding penalty under Section 76 and Section 78 of the Finance Act, 1994.

Analysis:
1. Facts and Background:
The case involved an assessee engaged in providing various services like sale and purchase of shares, earning brokerage, Corporate Advisory services, and underwriting services. A show-cause notice was issued stating discrepancies in tax payments for the years 1998-99 and 1999-2000. The notice lacked basic facts and clarity on the assessee's awareness of tax obligations. The assessee filed amendments for registration certificates to include underwriter's services and management consultant services.

2. Impugned Order and Appeal:
The Order-in-Original confirmed Service Tax demands under Management Consultant Services and Underwriter Services, along with interest and penalties under Sections 75, 76, and 78. The Commissioner (Appeals) reduced the demand under Management Consultant Services and Underwriter Services, recognizing exemptions and correct tax liabilities. The Commissioner found no intent to evade tax and reduced penalties under Sections 76 and 78.

3. Arguments and Precedents:
The assessee argued that all transactions were duly recorded, with occasional oversights in tax payments. Citing tribunal rulings, the assessee claimed no deliberate default for penalty imposition. The Revenue contended that penalties under Sections 76 and 78 were automatic in case of tax arrears, referring to a Kerala High Court ruling supporting separate penalties for distinct offenses.

4. Judgment and Conclusion:
The Tribunal found no contumacious conduct or deliberate default by the assessee. Transactions were properly recorded, amendments were promptly made, and discrepancies were rectified. The Commissioner's findings on tax liabilities were upheld, leading to the dismissal of penalties under Sections 76 and 78. The assessee's appeal was allowed, and the Revenue's appeal was dismissed, granting consequential benefits to the assessee as per the law.

This detailed analysis of the legal judgment highlights the issues, background, impugned order, appeals, arguments, relevant precedents, and the final judgment, providing a comprehensive understanding of the case.