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June 2015

44. [2015-TIOL-1239-HC-P&H-ST] Ajay Kumar Gupta vs. CESTAT and Another.

By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
Reading Time 1 mins
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Service Tax deposited on a non-taxable service u/s. 73A(2) of the Finance Act with delay, penalty u/ss. 76 and 78 not leviable.

Facts:
The Appellant collected service tax on a non-taxable service and had deposited the tax with delay without the payment of interest. Show Cause Notice was issued proposing levy of interest and penalty u/ss. 76, 77 and 78 of the Finance Act, 1994. The First Appellate Authority held that since the amount collected was not chargeable, penalty u/s. 76 and 78 was set aside. Aggrieved thereby, Revenue appealed before the Tribunal. While allowing the Revenue’s appeal, the Tribunal noted that since the tax was collected and the same was deposited only on the insistence of Revenue, it was a case of willful suppression and interest and penalty u/ss. 75 and 78 was restored leading to the present appeal.

Held:
The Hon’ble High Court noted that service tax was not leviable u/s. 68 of the Finance Act and the liability was only to deposit tax u/s. 73A(2) of the Finance Act which was done after delay. Thus as service was not taxable, penalty u/s. 78 was not invocable.

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