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April 2013

No levy of penalty in absence of suppression and holding of bonafide belief as to non-taxability.

By Puloma Dalal, Jayesh Gogri, Chartered Accountants
Reading Time 1 mins
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Facts:

Appellant, a co-operative society of agriculturists lost land due to setting up of a plant by ONGC. Appellant provided renting of cab service to ONGC. Initially ONGC did not reimburse the service tax and disputed the same and hence, Appellant did not deposit the tax. This fact was intimated to the Respondent. Later on the tax was deposited. SCN was issued to demand the tax and recovery of penalties. Tribunal confirmed the penalties without paying any heed to the Appellant’s contention of bonafide belief and absence of suppression of facts.

Held:

Tribunal committed error in not accepting the plea of bonafide belief of the Appellant even though the service tax on renting of cabs was new one and there were conflicting judgments of different Tribunals. The Tribunal has not taken into consideration the correspondence between Appellant and Respondent wherein Appellant had intimated the reason for non-payment of tax. Further, there was no fraud or misrepresentation or suppression by the Appellant. Therefore, it was held that extended period was not invokable and also did not justify levying of penalty.

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