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August 2011

(2011) 22 STR 656 (Tri.-Ahmd.) Fascel Ltd. v. Commissioner of S.T.

By Puloma Dalal, Jayesh Gogri
Chartered Accountants
Reading Time 2 mins
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Penalty — Actual amount not declared in ST-3 Return and intention to evade tax alleged — Tax demand with interest confirmed — Duty liability worked by appellants and no investigation by Revenue except issuance of SCN based on P/L account — Penalties set aside — Section 80 considered.

Facts:
The appellants engaged in providing telephone services were issued a show-cause notice (SCN) demanding service tax on noticing that the appellants had paid the service tax on lower amount than the income shown in the profit and loss account (P/L account). The appellants pleaded that the SCN was issued without any investigation/ verification and merely on the basis of the P/L account. Relying on the decision in the case of Martin & Harris Laboratories Ltd. v. CCE, Gurgaon 2005 (185) ELT 421 (Tri.-Delhi) and a host of other decisions, it was submitted that the Annual Report and P/L account were public documents and therefore on the ground of limitation, the whole demand was liable to be set aside. Moreover, the very fact that there was excess payment in one year and short payment in another year showed that there was no suppression, mis-declaration/fraud, etc. to invoke the extended time, whereas the Revenue contended that in view of the fact that ST-3 return did not reflect the correct position, suppression/ mis-declaration was rightly invoked.

Held:
The Tribunal observed that the appellants had reasonable cause for the alleged wrongful payment of service tax and hence it was held that the case was fit for invoking section 80 of the Finance Act, 1994 and the penalties were set aside.

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