2019 (5) TMI 589 - AT - Service Tax

Penalty u/s 76 and 78 of FA - service of repairing and maintenance, Erection of Equipments, piping fabrication etc. - Service tax with interest paid before issuance of SCN - HELD THAT - The appellant have not discharged the service tax under bonafide belief that service provided to 100% EOU is export of service. The service provided along with value has been declared in the ST-3 return. This clearly shows that the appellant under bonafide belief that service to 100% EOU is not chargeable to service tax, not paid service tax accordingly, they have made fit case for waiver of penalty imposed under Section 76 78. Since there is bonafide on the part of the appellant, the penalty under Section 78 is set aside by invoking Section 80 of the Finance Act - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Non-payment of service tax on the service of repairing and maintenance, erection of equipments, piping fabrication, etc.

Analysis:
The appellant had paid the entire service tax demand along with interest before the issuance of the show-cause notice (SCN). The appellant argued that the service value was declared in the ST-3 return, indicating no evasion of service tax payment. It was contended that the service provided to a 100% Export Oriented Unit (EOU) was believed to be non-taxable for export services. The appellant sought a waiver of penalties under Section 76 & 78, citing various judgments in support of their case. The Revenue reiterated the findings of the impugned order.

Upon careful consideration and record examination, it was noted that the service tax and interest had been paid by the appellant before the SCN was issued. The appellant's contention that services to a 100% EOU were considered non-taxable under a bonafide belief was accepted. As the service and its value were declared in the ST-3 return, it was evident that the appellant genuinely believed no service tax was applicable. In line with the appellant's bonafide belief, the penalties under Section 76 & 78 were waived. Referring to a judgment, it was established that simultaneous penalties under both sections cannot be imposed. Consequently, the penalty under Section 76 was set aside, and under Section 78, it was waived invoking Section 80 of the Finance Act, leading to the allowance of the appeal.

This judgment highlights the importance of bonafide belief in tax matters and the significance of declaring services accurately in returns. It also clarifies the applicability of penalties under different sections and the circumstances under which they can be waived.