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2018 (11) TMI 676 - AT - Service Tax100% EOU - Penalty - GTA Service - reverse charge mechanism - liability of service tax - Held that - The demand of ₹ 39,58,406/- was raised which was reduced to ₹ 2.74 lakhs in the Order-in-Original. While reducing the demand to ₹ 2.74 lakhs the calculation shown in para 4.7 and 4.8 of the Order-in-Original does not match. While the total differential duty payable as per para 4.7 of the Order-in-Original works out to ₹ 88,084/- 41,553/- 14,812/- ₹ 1,4,449/- whereas the demand confirmed is ₹ 2,74,302/-. Penalty u/s 77(1) of the Finance Act, 1994 - Held that - The appellant was registered as Service Tax assessee from 2005 onwards. The new unit came into existence in 2008. In these circumstances, the provisions of Rule 4(3) will have no application as the said provisions apply only to units which were already availing the benefit of common registration prior to 2.11.2006 - quantum of penalty reduced. Appeal allowed in part.
Issues:
Imposition of penalty on M/s Genom Biotech Pvt. Ltd. for not obtaining separate registration for a new unit established adjacent to the existing unit. Discrepancies in the calculation of duty demand and penalty imposition under different sections of the Finance Act, 1994. Analysis: 1. Imposition of Penalty for Non-Registration of New Unit: The appellant argued that as an EOU, they were paying Service Tax on GTA service under reverse charge basis using the registration of the original unit, even after a new unit was established adjacent to the existing one. The appellant contended that Rule 4(3) of the Service Tax Rules, 1994 did not mandate separate registration for the new unit if centralized billing or accounting system was in place. The appellant highlighted that they had centralized billing and accounting systems, eliminating the necessity for separate registration. The appellant also pointed out their trading unit in Mumbai, registered as GTA and paying taxes, emphasizing that the demand was reduced to &8377; 2,74,302 from the initial &8377; 39 lakhs. The appellant argued against the penalty under Section 77(1), asserting that the new unit did not require separate registration due to the existing centralized systems. 2. Discrepancies in Duty Demand Calculation and Penalty Imposition: The Order-in-Original initially raised a demand of &8377; 39,58,406, which was reduced to &8377; 2.74 lakhs. However, discrepancies were noted in the calculation, as the total differential duty payable per para 4.7 did not match the demand confirmed. The tribunal observed that part of the tax was paid along with returns, necessitating a revision of the duty demand after excluding the amount already paid. Regarding penalties, the tribunal reduced the penalty under Section 77(1) to &8377; 10,000 due to the nature of the offense and upheld the penalty under Section 77(2). The penalty under Section 78 was to be revised based on the actual amount short paid by the appellant. 3. Conclusion: The tribunal set aside the impugned order, remanding the matter to the original adjudicating authority for revising the duty demand after excluding the amount already paid. The penalty under Section 77(1) was reduced, while penalties under other sections were either upheld or subject to revision based on the actual shortfall. The appeal was partly allowed, providing relief to M/s Genom Biotech Pvt. Ltd. in the specified terms. This comprehensive analysis of the judgment addresses the issues of penalty imposition and duty demand calculation, highlighting the legal arguments presented by the appellant and the tribunal's findings and decisions.
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