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July 2013

2013 (30) STR 385 (Tri-Del.) Sarvashaktiman Traders Pvt. Ltd. vs. Commissioner of Central Excise, Kanpur

By Puloma Dalal, Jayesh Gogri, Chartered Accountants
Reading Time 2 mins
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What will be the date of receipt for the purpose of payment of service tax? – cheque was received on 04-01-2007, deposited in bank on 05-02-2007 and service tax paid on 05-03-2007.

Facts:
The appellant provided business auxiliary services. For the services provided till December, 2006, the bills were raised in December, 2006 but the payment was received in January and the cheque deposited in the bank on 05-02-2007; as such the service tax was paid on 05-03-2007. The original adjudicating authority imposed penalties u/s. 76, 77 and 78 of the Finance Act, 1994. On appeal against the above order, Commissioner (Appeals) set aside the penalty imposed u/s. 78 and 77 but upheld penalty u/s. 76.

Held:
The Tribunal held that, section 76 provided for imposition of penalty where the person liable to pay service tax in accordance of section 68 failed to pay such tax. In the present case, although the cheque was received on 04-01-2007, the same was actually deposited in the bank on 05-02-2007 and thus, it was to be considered as if the consideration was received in the month of February itself, requiring them to deposit the tax in March, 2007. There being no delay in depositing the service tax, penalty u/s. 76 was set aside with consequential relief.
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