By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
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Whether invocation of extended period and imposition of penalty u/s. 78 go hand-in-hand? Held yes.
Facts:
The Appellant is receiver of Goods Transport Agency (GTA ) service during April 2005, to October 2006. Adjudicating authority confirmed the demand and penalty. Commissioner (Appeals) upheld the service tax liability on the ground that there was suppression of facts but deleted the penalty u/s. 78 on the ground that the Appellant proved a reasonable cause for the failure. Thus the case is squarely covered by section 80 of the Act. Revenue did not contest deletion of penalty. Assessee’s appeal before Tribunal was dismissed for non-deposit of service tax.
Held
Hon’ble High Court held that the condition for invocation of extended period of limitation as provided in section 73 and the condition precedent to imposing penalty u/s. 78 are identical viz. there should be fraud, collusion or wilful misstatement or suppression of facts or contravention with intent to evade payment of service tax. Once the Commissioner (Appeals) has come to a finding that there was genuine cause for non-imposition of penalty then the same cause is also to be factored to conclude that extended period of limitation cannot be invoked. This finding will also apply to determine whether there was any intent to evade payment of service tax. High Court also observed that, revenue has not preferred appeal against deletion of penalty. High Court set aside the order of Tribunal and directed it to take up the matter on merits without requiring any pre-deposit.
