2017 (11) TMI 1447 - AT - Service Tax

Penalty u/s 77 and 78 - alleged non-payment of service tax - suppression of facts - Held that - the department has not produced any evidence which shows that there is suppression of material fact by the assessee with intent to evade payment of service tax - penalty set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against penalty under section 77 and 78 of Finance Act, 1994.

Analysis:
The appeal was filed by the revenue challenging the order passed by the Commissioner (Appeal) setting aside the penalty under section 77 and 78 of the Finance Act, 1994. The case involved a construction business that allegedly did not pay service tax and cessess amounting to ?22,07,559 for services provided between 10.09.2004 to 31.12.2006. The show cause notice issued demanded the amount along with interest and proposed penalties under sections 76, 77, and 78 of the Finance Act, 1994. The Asst. Commissioner confirmed the demand and imposed penalties under section 78, in addition to penalties under sections 76 and 77. The Commissioner (Appeal) observed that the appellant, by transferring the land, became a contractor liable to pay service tax, and the value of taxable services should exclude the cost of land belonging to customers. The appellant was entitled to abatement under Notification No.15/2004-ST dated 10.09.2004. The revenue contended that the penalty dropping was not sustainable, alleging suppression of material facts by the assessee to evade tax.

The Appellate Tribunal found no infirmity in the impugned order and upheld the decision of the Commissioner (Appeal) to dismiss the revenue's appeal. The Tribunal noted that there was no evidence of suppression of material facts by the assessee to evade payment of service tax. The relevant portions of the impugned order highlighted the liability of the appellant as a service provider from 10.09.2004, excluding the cost of land belonging to customers for computation of tax. The appellant, having transferred the land, was considered a contractor liable to service tax. The Tribunal emphasized the need to reduce the gross value of taxable services by the cost of materials supplied in construction. The appellant's claim of discharging tax liability was also considered, and the Tribunal found no grounds to overturn the Commissioner (Appeal)'s decision.

In conclusion, the Tribunal upheld the decision to set aside the penalty under sections 77 and 78 of the Finance Act, 1994, based on the findings that there was no suppression of material facts by the assessee to evade service tax payment. The judgment highlighted the appellant's liability as a service provider post land transfer, the exclusion of land cost for tax computation, and the entitlement to abatement under the relevant notification. The Tribunal's detailed analysis supported the dismissal of the revenue's appeal, emphasizing the lack of evidence supporting the revenue's claims of material fact suppression.