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TMI Blog2025 (3) TMI 575X X X X Extracts X X X X X X X X Extracts X X X X ..... twhile Service Tax Commissionerate, Noida that the Appellant was not paying Service Tax properly and also shifted its business premises from H-171, Sector-63, Noida to A-66, Sector- 63, Noida without amendment to this effect in its Service Tax Registration. Following the information, the Officers of Anti- evasion branch Service Tax, Commissionerate Noida visited the premises of the Appellant at A-66, Sector-63, Noida on 11.05.2016 and conducted search vide Panchnama dated 11.05.2016. The Appellant was found to be registered as Service Tax Assessee vide Registration No. AAFCR6959PSD001. During investigation, statement of Shri Mukesh Khurana, Director of the company, the Appellant No.2, was recorded. He stated that business premises of the company were shifted around one year back but no amendment application was filed to the Department. He informed that during the period 2015-16, tax liability amounting to Rs.54,46,368/- was pending under RCM. He voluntarily paid Rs.10,00,000/- towards the above demand. Statement of Shri Khurana was again recorded on 30.6.2016. He admitted Service Tax liability amounting to Rs.2,94,39,142/- and further stated that his company always had balance in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1994 by invoking extended period. 6. In view of the above, Show Cause Notice SCN dated 05.11.2018 was issued proposing demand of Service Tax of Rs.3,60,82,906/- under proviso to Section 73(1) of the Finance Act, 1994 and proposal for appropriation of Rs.3,04,39,142/- already paid was also made. Interest on the above amount and equal penalty was also proposed. Cenvat Credit amounting to Rs.48,72,638/- was demanded under Rule 14 of the Cenvat Credit Rules, 2004 CCR, 2004 read with proviso to Section 73(1) of the Finance Act, 1994 along with interest and equal penalty. Penalty was also proposed under Section 77 of the Finance Act, 1994. Late fees of Rs.72,600/- was also proposed in terms of Section 70 of the Finance Act, 1994 readwith Rule 7C of the Service Tax Rules 1994. Besides above, personal penalty upon Shri Mukesh Khurana, Director of the Appellant Company was also proposed under Section 78A of the Finance Act, 1994 for contravention for Service Tax Rules/Finance Act, 1994. 7. The SCN was adjudicated vide the impugned order and demand of Service Tax amounting to Rs.3,60,82,906/- was confirmed along with interest and equal penalty. Amount of Rs.3,04,39,142/- which was alread ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding denial of Cenvat credit, he submitted that all tax paying documents were already produced at the time of investigation. He further submitted that all entries regarding receipt of input and input services were duly accounted for in the Books of Accounts. Hence, denial of credit is not justified. He also contested proposal for imposition of penalty when due taxes were already paid and declared in Service Tax returns. As regard demand of Service Tax under RCM, the learned Counsel submitted that it was a case of revenue neutrality. If the tax liability arising out of RCM was deposited, the same would had been available in the form of Cenvat credit to the Appellant. Hence, there was no loss of revenue to the Exchequer. In such situation, the demand would not survive in case of RCM. As regards personal penalty on Shri Mukesh Khurana, director, it was submitted that role of Shri Khurana was not discussed in any evasion of tax. Since there is no evasion of tax by the Appellant No.1, imposition of penalty on Shri Mukesh Khurana is not justified. 10. Learned Authorized Representative of the Department justified the impugned order and prayed that the appeal filed by the Appellant, being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice of demand was required to be issued under Section 73(1). We further find that in the present case, tax was self assessed and service tax liability was declared in returns as already admitted in the SCN as well as impugned order. So, issuance of SCN for recovery of self assessed tax is patently unwarranted and legally incorrect. It is also found that the service tax liability declared in the ST-3 returns was deposited before issuance of SCN. As per provisions of Section 73(3), if any short levied or short paid service tax is deposited before issuance of the SCN, no notice under Section 73(1) in respect of the amount so paid was required to be issued. As regard, imposition of equal penalty under Section 78 of the Finance Act, 1994, we find that it is imposable when any notice has been issued under Section 73(1) of the Finance Act, 1994, but in this case, as there was no requirement to issue notice under Section 73, the imposition of penalty under Section 78 is unwarranted. In this regard, we find support from the decision of the Tribunal in the case of M/s Mass Marketing and Advertisement Services P. Ltd., [2006 (3) S.T.R. 333(T)] where it has been held that no penalty is imposa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Appellant. The cancellation charge is a legal consequence arising on account of agreement. It is a kind of penalty which is a charge without a service. Hence, no service tax is chargeable. In this regard we refer to the decision of the Tribunal in the case of Jaipur Jewellery Shop [2016 (12) TMI-344-CESTAT] where issue of charging service tax on cancellation charges has been considered. In that case the party were engaged in business exhibition service and arranged booths booked by its customer and in case of cancellation, booking amount was refunded after certain deductions as cancellation charges. The Department raised the demand of service tax on the said cancellation charges treating them as a service under Section 66A(e) of the Finance Act, 1994. The Tribunal quashed the demand and held that no service tax was chargeable on such cancellation charges. 14. In the present case, nothing is being tolerated by the party. The buyer entered into an agreement to buy flat and as per the agreement, if the buyer cancels the deal, he has to pay certain amount of the value of flat. The charge of the said amount is a legal consequence as defined in the Indian Contract Act. It is a kin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustries Pvt. Ltd., [ 2019-TIOL-3651- CESTAT-AL]. In that case, the party was manufacturing confectionaries for and on behalf of Parle Biscuits Pvt. Ltd., on job work basis. Besides job charges, the party were also charging certain amount, termed as ex-gratia charges, when quantity ordered for manufacturing was less that minimum mutually agreed quantity. The Department raised demand of service tax on such ex-gratia charges. The Tribunal dropped the demand by observing as under :- "In the present case apart from manufacturing and receiving the cost of the same, the appellants were also receiving the compensation charges under the head ex- gratia job charges. The same are not covered by any of the Acts as described under Section 66E (e) of the Finance Act, 1994. The said Sub-clause proceeds to state various active and passive actions or reactions which are declared to be a service namely; to refrain from an act, or to tolerate an act or a situation, or to do an act. As such for invocation of the said clause, there has to be first a concurrence to assume an obligation to refrain from an act or tolerate an act etc. which are clearly absent i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les Ltd., [2019 (31) G.S.T.L. J96 (S.C.)]. In that case, it was held that the demand of differential duty would not be sustainable as the same is available as rebate to the assessee. So, it is revenue neutrality case. Decision of the Hon‟ble Supreme Court in the case of Mahindra & Mahindra Ltd., [2019 (368) E.L.T. (A4) (S.C.)] is also referred to. In this case the Court has enunciated that demand of differential duty as not sustainable on the ground of revenue neutrality in as much as differential duty would be available as credit to the assessee. In view of the above judgments, it is clear that demand in the present case is not sustainable. Issue No. (iv): 19. As regards demand of late fee for filing ST-3 returns beyond the due date specified under Section 70 of the Finance Act, 1994, the relevant provisions are as below:- "(1) Every person liable to pay the service tax shall himself assess the tax due on the services provided by him and shall furnish to the Superintendent of Central Excise, a return in such form and in such manner and at such frequency and with such late fee not exceeding twenty thousand rupees, for delayed furnishing of return, as may be prescribed." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of taxable service in violation of the rules made under the provisions of this Chapter; or (c) availment and utilisation of credit of taxes or duty without actual receipt of taxable service or excisable goods either fully or partially in violation of the rules made under the provisions of this Chapter; or (d) failure to pay any amount collected as service tax to the credit of the Central Government beyond a period of six months from the date on which such payment becomes due, then any director, manager, secretary or other officer of such company, who at the time of such contravention was in charge of, and was responsible to, the company for the conduct of business of such company and was knowingly concerned with such contravention, shall be liable to a penalty which may extend to one lakh rupees." 24. In the present case, evasion of service tax is not proven. There is no case of issuance of fake invoice or challan and also no case of wrong availment of credit. Nothing has been discussed that taxes were collected but not paid. So, no penalty is imposable under the said provision. 25. In view of the above discussions, the impugned order cannot be sustained and the same is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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