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TMI Blog2017 (12) TMI 1672X X X X Extracts X X X X X X X X Extracts X X X X ..... -4-2011, relief in the form of reduction of 3% interest rate was provided to small service providers whose value of taxable services did not exceed 60 lakh rupees in a financial year - The Bench observes that the wordings “does not exceed sixty lakh rupees during any financial year” clearly conveys the meaning that the taxable turnover of a service provider should not exceed 60 lakh rupees in all the financial years covered in the notice to be eligible for the benefit of reduced interest rate. Hence the Bench is in agreement with the department’s stand on the issue and holds that the applicant is not entitled to the benefit of reduced rate of interest inasmuch as out of the impugned period covered in the notice i.e. 2011-12 to 2015-16, applicant’s turnover had exceeded 60 lakh rupees during the financial year 2013-14. The actual interest liability on the service tax works out to ₹ 13,02,901/- which was also admitted and paid by the applicant at the time of filing Settlement Application. Hence, the Bench holds that the claim for reduced rate of interest made subsequently vide their letter dated 16-6-2017 is without any merits and therefore rejects the same. Penalty - He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not paying service tax on such commission received, the officers of the DGCEI, HZU, Hyderabad initiated investigation and summonses were issued to the applicant and M/s. Subhagruha calling for the records for verification. The applicant in response to the summons produced the copies of Income Tax Returns for the periods 2011-12 to 2014-15, Form 26AS for the periods 2011-12 to 2014-15, Form 16A issued by M/s. Subhagruha for the periods 2011-12 to 2015-16 and Bank Statements for the periods 2011-12 to 2015-16. M/s. Subhagruha also furnished copies of the Income Tax Returns for the periods 2011-12 to 2014-15 and Trial Balance for the year 2015-16 and a Statement showing the commission on sales paid to their Real Estate Agents for the periods 2011-12 to 2015-16. A statement was recorded from Shri Javvadi Srinivas, Managing Director of M/s. Subhagruha on 3-6-2016. A statement dated 22-8-2016 was also recorded from the applicant. The scrutiny/verification of documents and statements of the applicant as well as that of other persons, inter alia, revealed that : M/s. Subhagruha was involved in acquiring open land, developing it into residential plots and selling to inde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d period worked out to ₹ 22,53,449/-. After initiation of investigation, the applicant admitted non-payment of service tax on the taxable services provided by him and obtained Service Tax Registration bearing Registration No. AWMPM7670ESD001. He also paid an amount of ₹ 5,00,999/- in cash towards their service tax liability. 1.3 Based on the above, the applicant was issued with the aforesaid Show Cause Notice by the Deputy Director, DGCEI, Hyderabad Zonal Unit. The show cause notice demanded a total amount of ₹ 22,53,449/- towards service tax liability and interest thereon under proviso to Section 73(1) and Section 75 respectively of the Finance Act, 1994. The show cause notice also proposed to appropriate an amount of ₹ 5,00,999/- paid by the applicant towards his service tax liability. The show cause notice further sought to impose penalty under Sections 76, 77 and 78 of the Finance Act, 1994. Applicant s disclosure : 2.1 The applicant filed the application before the Additional Bench of Settlement Commission, Chennai on 17-5-2017 and the same was numbered as S.A.S. Tax/52/2017- SC. Based on the reply received for the first notice, the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ST-3 returns vide Challan No. 80000, dated 29-5-2017. Additional submissions : 2.4 The applicant vide his letter dated 16-6-2017 made the following additional submissions with regard to interest liability : The applicant was eligible for reduced rate of interest i.e., normal rate of interest reduced by three per cent. as per the proviso to Section 75 of the Finance Act, 1994, for calculation of interest liability on the admitted amount of service tax for the period covered by the show cause notice. The proviso to Section 75 of the Finance Act, 1994 read as provided that in the case of service provider, whose value of taxable services provided in a financial year does not exceed sixty lakh rupees during any of the financial years covered by the notice or during the last preceding financial year, as the case may be, such rate of interest, shall be reduced by three percent. per annum . The value of taxable services provided by the applicant during the financial years 2011-12, 2012-13, 2014-15 and 2015-16 did not exceed sixty lakh rupees as shown in Annexure-A10 to the SCN; that out of five financial years covered by the SCN i.e., 2011-12 to 2015-16, during fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ars 2011-12 to 2015-16; that he was not aware that such activity is liable for Service Tax; that accordingly he had also not collected any service tax from them; that once pointed out by the department he admitted the entire tax liability of ₹ 22,53,449/- and paid ₹ 5,00,999/- during the course of investigation and the remaining tax liabilities along with interest thereof after issue of SCN and before filing the settlement application; that he also paid the late fee for delayed filing of statutory returns; that while admitting the entire service tax liability and interest thereof, he seeks the benefit of reduced rate of interest by 3% per annum in terms of the proviso to Section 75 of the Finance Act, 1994 as in 4 out of 5 financial years their turnover was less than ₹ 60 lakhs but he left the decision to the Bench in this regard. 4.3 In view of the submissions made in the application, true and full disclosure made before the Hon ble Settlement Commission, he prayed for waiver of penalty and immunity from prosecution. 4.4 The Learned Departmental representative reiterated the submissions made in the jurisdictional Commissioner s report vide his report C. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year 2013-14, thus making him ineligible for reduced rate of interest at 3% for determination of interest liability. 5.4 In this regard, the Bench observes that in the Finance Act, 2011, the rate of interest leviable under Section 75 of the Finance Act, 1994 for delayed payment of service tax was increased from 13% to 18%. However vide proviso to Section 75 with effect from 8-4-2011, relief in the form of reduction of 3% interest rate was provided to small service providers whose value of taxable services did not exceed 60 lakh rupees in a financial year. Proviso to Section 75 of the Finance Act, 1994 reads as provided that in the case of service provider, whose value of taxable services provided in a financial year does not exceed sixty lakh rupees during any of the financial years covered by the notice or during the last preceding financial year, as the case may be, such rate of interest, shall be reduced by three per cent. per annum . The Bench observes that the wordings ...does not exceed sixty lakh rupees during any financial year... clearly conveys the meaning that the taxable turnover of a service provider should not exceed 60 lakh rupees in all the financial years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lead to the conclusion that they have concealed the liability before the assessing authorities and the Bench holds that the applicant is liable for penalty. The Bench also notes that the applicant has made a true and full disclosure of their liability and considering the co-operation extended during the course of proceedings, the Bench is inclined to grant partial immunity from penalty to the applicant. Prosecution : 5.6 In the facts and circumstances of the case, the Bench considers it a fit case for grant of immunity from prosecution to the applicant. ORDER 6.1 In the light of the above, the Bench settles the case on the following terms and conditions under the Central Excise Act, 1944 made applicable to Service Tax by Section 83 of the Finance Act, 1994. i. The additional amount of Service Tax is settled at ₹ 22,53,449/- (Rupees Twenty-Two Lakhs Fifty-Three Thousand Four Hundred and Forty-Nine only). This amount having already been paid is appropriated and adjusted towards Service tax liability. No further liability subsists in this regard. ii. The interest liability is settled at ₹ 13,02,901/- (Rupees Thirteen Lakhs Two Thousand Ni ..... X X X X Extracts X X X X X X X X Extracts X X X X
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