2016 (9) TMI 741 - AT - Service Tax

Levy of penalty - delayed payment of service tax - As per the appellant, the said service tax was not deposited as their customer had not given the tax amount and they were under the bonafide impression that if tax payment has not been paid by the customers, same need not be deposited. As soon as the Revenue pointed out that, they deposited the tax along with interest on 16.9.2008. - Held that - Non-receipt of amount of service tax from his client cannot be adopted as a excuse for non-payment of service tax to the exchequer when the liability lies heavily on the appellant himself. As such, we find no justifiable reason for invoking provisions of section 80 so as to set aside the penalty. However, we take note of the appellants submission that amount of around ₹ 45 lakh deposited by them for the year 2007-2008 is without availing the benefit of abatement in terms of Notification No. 15/2004. As we have already observed that the benefit of said notification would be available to the assessee even if it has received free supply items from his clients, we are of the view that appellants duty liability is required to be requantified in terms of law declared by the Larger Bench in the case of Bhayana Builders (P) Ltd. 2013 (9) TMI 294 - CESTAT NEW DELHI (LB) - Matter remanded back. - Decided partly in favor of assessee.

Summary

Issues:
1. Benefit of abatement under notification No. 15/2004 for the period 2005-2007.
2. Non-payment of service tax and imposition of penalties for the period 2007-2008.

Issue 1: Benefit of Abatement (2005-2007)
The appellants were engaged in providing commercial or industrial construction services and claimed the benefit of notification No. 15/2004 for abatement during 2005-2007. The denial of this benefit was based on the appellants receiving material free of cost from the service recipient. The Tribunal, citing the case of Bhayana Builders Pvt. Ltd., held that the issue was no longer res integra and ruled in favor of the appellants, setting aside the demand for this period.

Issue 2: Non-Payment of Service Tax and Penalties (2007-2008)
During 2007-2008, the appellants failed to file service tax returns or pay the tax until prompted by the Revenue. The appellants argued that they did not pay the tax as their customer had not paid them, leading to a bonafide impression that they need not deposit the tax. However, the Revenue contended that the appellants, being aware of their tax obligations from previous years, displayed malafide intent by not paying the tax for 2007-2008. The Tribunal agreed with the Revenue, stating that non-receipt of tax from the client was not a valid excuse for non-payment. The appellants' penalty was upheld, but the matter was remanded for re-quantification of duty liability based on the Larger Bench's decision in Bhayana Builders Pvt. Ltd.

In conclusion, the Tribunal allowed the appeal in part, setting aside the demand and penalty for the previous year while remanding the matter for re-quantification of duty liability for the period 2007-2008. The appellants' argument regarding non-receipt of tax from the client was not accepted as a valid reason for non-payment of service tax. The penalty imposed on the appellants was upheld, and the quantification of penalty and duty liability was left to the original adjudicating authority.