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2019 (7) TMI 723 - AT - Service TaxImposition of penalty u/s 76 of FA - delayed payment of service tax - Manpower Recruitment or Supply Agency Service - alleged failure to pay their service tax liability on or before the due date for the period April 2012 to March 2014 - failure to file returns - HELD THAT - Penalty under Section 76 is for failure to deposit the tax in time. When admittedly appellants were not depositing the tax by the due date, the penalties need to be imposed even if the appellants claim no mens rea - Demand and appropriation of the amounts paid upheld. Classification of services - whether these service qualify to be the Manpower Recruitment Supply Services or are job work services exempted under the Notification 25/2012-ST.? - HELD THAT - The agreement between the appellant and the M/s Sigma is nothing but a contract labour agreement, executed for the purpose of providing requisite manpower and is not a job work contract. Hence the services provided by the appellant cannot be said to be those in respect of which Sl No 30 of exemption Notification No 25/2012-ST shall apply. - appellants are not eligible for the benefit of said exemption Valuation - addition of Canteen Charges for determining the taxable value - HELD THAT - The canteen charges are reimbursable expenses for providing the services - Once it is held that these charges have not been recovered from M/s Sigma then by no stretch of imagination can these charges be considered as charges towards providing the taxable service. Hence we hold that such canteen charges which have been recovered by the appellant from their own employees cannot be added to the value determined in respect taxable service provided - Matter for remanded for recomputing the demand after reducing the taxable value by the canteen charges so recovered. Extended period of limitation - HELD THAT - Since the fact about non-payment of service tax in respect of services provided to M/s Sigma, by treating the agreement as job work agreement was never brought to the knowledge of department hence extended period of limitation has been rightly invoked by the adjudicating authority - The issue of limitation has to be considered on the facts of case in hand and the conduct of the assessee/ appellant. There cannot be application of the decisions in determining the issue of limitation on the basis of the law laid down therein ignoring the facts of case in hand. - Demand confirmed invoking the extended period of limitation. Penalty u/s 76 and 77 of FA - HELD THAT - It is settled law that penalty under Section 76 77of the Finance Act, 1994 is for the contumacious conduct of the appellants in relation to delay in payment of tax and filing of the relevant returns. These sections do not require establishment of any malafide intentions and mens rea for imposition of penalty. Penalty u/s 76 justified - The appellants had filed their ST-3 returns by the due date hence the we are not in position to uphold the penalty imposed under section 77(2) of the Finance Act, 1994 and also the late fees imposed in terms of Section 70(1) of the Finance Act, 1994 in respect of these returns. Hence penalties and fees imposed in terms of these sections is set aside. Penalty u/s 78 of FA - HELD THAT - Since the penalties imposed under Section 76 is upheld, penalties imposed under Section 78 cannot be justified, Hence the penalties imposed under Section 78 is set aside. Appeal allowed in part.
Issues Involved:
1. Demand of Service Tax and Education Cess for delayed payment. 2. Demand of Service Tax and Education Cess for short payment or non-payment. 3. Recovery of interest on confirmed demands. 4. Imposition of penalties for failure to pay service tax within due dates. 5. Imposition of penalties for incorrect details in service tax returns and late filing of returns. 6. Imposition of penalties for tax delinquency. 7. Applicability of exemption under Notification No 25/2012-ST for job work activities. 8. Inclusion of canteen charges in taxable value. 9. Invocation of extended period of limitation. 10. Simultaneous imposition of penalties under Sections 76 and 78. Detailed Analysis: 1. Demand of Service Tax and Education Cess for Delayed Payment: The Commissioner confirmed the demand of Service Tax and Education Cess amounting to ?10,81,74,382/- for the delayed payment by the assessee, appropriating the amount already paid by the assessee. The tribunal upheld this demand and appropriation, noting that the appellant admitted their liability and deposited the tax along with interest. 2. Demand of Service Tax and Education Cess for Short Payment or Non-Payment: The Commissioner confirmed the demand of Service Tax and Education Cess amounting to ?39,33,395/- for short payment or non-payment in respect of services provided to M/s Sigma. The tribunal upheld this demand but remanded the matter for recomputing the demand after reducing the taxable value by the canteen charges recovered from employees. 3. Recovery of Interest on Confirmed Demands: The Commissioner ordered the recovery of interest on the confirmed demands under Section 75. The tribunal upheld the recovery of interest, citing the Bombay High Court decision in Padmashree V V Patil SSK, which held that interest is chargeable even if the short duty is deposited before the issuance of a show cause notice. 4. Imposition of Penalties for Failure to Pay Service Tax Within Due Dates: The Commissioner imposed a penalty under Section 76 for failure to pay service tax within due dates. The tribunal upheld this penalty, referencing the Supreme Court decision in Gujarat Travancore Agency Cochin, which stated that penalty for tax delinquency is a civil obligation and does not require proof of mens rea. 5. Imposition of Penalties for Incorrect Details in Service Tax Returns and Late Filing of Returns: The Commissioner imposed penalties under Section 77(2) for incorrect details in service tax returns and late filing of returns. The tribunal set aside these penalties, noting that the appellants had filed their ST-3 returns within the extended due dates notified by the CBEC. 6. Imposition of Penalties for Tax Delinquency: The Commissioner imposed a penalty under Section 78 for tax delinquency. The tribunal set aside this penalty, citing the proviso to Section 78, which states that penalties under Sections 76 and 78 should not be imposed simultaneously. 7. Applicability of Exemption under Notification No 25/2012-ST for Job Work Activities: The appellants claimed that their services to M/s Sigma were exempt under Notification No 25/2012-ST as job work. The tribunal rejected this claim, determining that the agreement between the appellants and M/s Sigma was for contract labour and not job work, thus not qualifying for the exemption. 8. Inclusion of Canteen Charges in Taxable Value: The Commissioner included canteen charges recovered from employees in the taxable value. The tribunal disagreed, holding that canteen charges recovered from employees should not be added to the taxable value for service tax purposes. 9. Invocation of Extended Period of Limitation: The Commissioner invoked the extended period of limitation under the proviso to Section 73(1) due to suppression of facts by the appellants. The tribunal upheld this invocation, noting that the appellants did not inform the department about the non-payment of service tax for services provided to M/s Sigma. 10. Simultaneous Imposition of Penalties under Sections 76 and 78: The tribunal set aside the penalties imposed under Section 78, as penalties under Sections 76 and 78 cannot be imposed simultaneously according to the proviso to Section 78. Conclusion: The tribunal upheld the demands of service tax and interest, remanded the matter for recomputing the demand after excluding canteen charges, upheld penalties under Section 76, and set aside penalties under Sections 77(2) and 78 and late fees under Section 70(1).
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