2018 (12) TMI 1536 - AT - Service Tax

Imposition of penalty - service tax paid on being pointed out - no malafide intent - Commercial or Industrial Construction Service - Held that - The demand was raised on the basis of audit. The appellant have not denied the charges of non payment of service tax and immediately on pointing out by the audit, they paid the service tax and interest was also paid subsequently - also, there is no suppression of fact on their part. To invoke penalty, there should be suppression of fact and mis-declaration etc. on the part of assessee, which does not exist in the fact of the present case - penalty set aside - demand of service tax and interest and payment thereof is maintained - appeal allowed in part.

Summary

Issues involved:
Demand of Service Tax on Commercial or Industrial Construction Service.

Analysis:
The issue in this case pertains to the demand of Service Tax on Commercial or Industrial Construction Service. The appellant, represented by Shri S.J. Vyas, does not contest the service tax liability, which was already paid along with the interest. The appellant argues that the entire demand is for the extended period, but there was no charge of suppression of fact in the Show Cause Notice (SCN). The non-payment of Service Tax was highlighted by the audit, and the appellant promptly paid the tax, indicating no malafide intention. The appellant also contests the imposition of penalties under Sections 76, 77, and 78, citing a judgment of the Hon'ble Gujarat High Court in the case of Raval Trading Company Vs. CST. The appellant requests setting aside the penalties under Section 80 of the Finance Act.

During the proceedings, Shri G. Jha, Ld. Superintendent (AR) representing the Revenue, reiterates the findings of the impugned order. After considering the arguments from both sides and examining the records, the Tribunal notes that the demand was raised based on the audit findings. The appellant did not dispute the non-payment of service tax and promptly cleared the dues upon audit notification. As the SCN did not explicitly mention the invocation of the extended period, there was no suppression of fact on the part of the appellant. The Tribunal emphasizes that for Section 80 to apply, there must be suppression of fact or misdeclaration by the assessee, which is absent in this case. Consequently, the penalties imposed under Sections 76, 77, and 78 are deemed unsustainable under Section 80. The Tribunal sets aside the penalties under the aforementioned sections while upholding the demand for service tax and interest payment. Ultimately, the appeal is partly allowed based on the above considerations.

This judgment highlights the importance of explicit charges in the SCN and the requirement of suppression of fact for invoking penalty provisions. It underscores the significance of prompt compliance upon audit findings and the legal standards for imposing penalties under the Finance Act.