By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
fiogf49gjkf0d
Where section 80 is invoked by the Appellate Authority and penalty u/s. 76 & 78 is reduced, even reduced penalty u/s. 76 and 78 is not tenable in law.
Facts:
Appellant was selling agent of ICICI bank and provided marketing services to it, which were taxable as ‘business auxiliary service’ (BAS) w.e.f. 01-07-2003. However, appellant did not obtain registration under service tax and no service tax was paid under ‘BAS’. SCN was issued confirming service tax demand for the period from 01- 07-2003 to 01-07-2004 invoking extended period of limitation u/s 73(i)(a) of the Act. On appeal, Commissioner (Appeals) invoked section 80 and reduced penalty u/s. 76 & 78 and waived penalty u/s. 77. The appellant disputed invocation of extended period and levy of penalty before Tribunal on the ground that Commissioner (Appeals) has invoked section 80.
Held:
Hon’ble Tribunal held that longer period of limitation correctly invoked u/s. 73(1)(a) since, in terms of section 73 as it stood during the period of dispute, for invoking longer limitation period existence of fraud wilful mis-statement, suppression of facts and deliberate contravention of the provisions of Finance Act, 1994 or of the rules made there under with intent to evade tax was not necessary and what was required was reason to believe on the part of the Assistant /Deputy Commissioner that on account of omission or failure on the part of the assessee to file return u/se. 70 for any prescribed period or to disclose wholly or truly all the material facts required for verification of assessment u/s. 71, some value of the taxable service has escaped assessment or has been under-assessed or service tax has not been paid or has been short-paid or any sum has erroneously been refunded. In this case, during the period of dispute, the appellant did not file any return and did not register and hence in terms of the section 73(1)(a) as it stood during that period, longer limitation was correctly invoked.
However as regards penalty u/s. 76 and 78, Tribunal held that, since the Commissioner (Appeals) gave a finding that the Appellant may not be aware of service tax rules and regulation and invoked benefit u/s. 80 of the Act by reducing quantum of penalty, his decision to retain even reduced penalty u/s. 76 and 78 was set aside.
