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Corporate News *  Service tax penalty can’t survive when assessee acted on dept.’s own view of non-taxability: Delhi High Court. *  GST section 74 extended limitation questionable when form 26AS mismatch was already known: Karnataka High Court grants interim relief. *  CGST demand prima facie impermissible after state GST settlement under section 128A: Bombay High Court. *  Supreme Court asks GSTAT to sympathetically consider delay as taxpayers pursued remedy before wrong forum. *  Supreme Court stays Tripura High Court ruling protecting genuine buyers from ITC denial over supplier’s GST default. *  Diary entries alone can’t prove clandestine removal of goods: CESTAT quashes excise penalty on steel trader. *  Customs could investigate preferential tariff claims even before sec. 28DA: Delhi High Court. *  Customs dept. relied on fake AI generated case laws: supreme court quashes Rs. 425.28 crore penalty. *  No GST exemption in affiliation and annual registration charges for admission or conduct Of examinations: GSTAT. *  Mere invoices, cheque payments insufficient to establish genuine movement of goods: GSTAT restores Rs. 43.44 lakh ITC demand. *  Consolidated GST show cause notice covering multiple financial years is not without jurisdiction: Delhi High Court. *  Construction of independent houses on separate plots not taxable as ‘Residential Complex’ without common facilities: CESTAT. *  GST penalty exceeding statutory maximum unsustainable; Allahabad High Court quashes ? 50,000/- penalty after taxpayer filed return and paid late fee. *  GST order against standard chartered bank passed without hearing set aside by Bombay High Court. *  Retracted statements can’t be relied upon without cross-examination: CESTAT quashes gold confiscation. *  Burden to prove misclassification lies on customs department: CESTAT. *  CESTAT quashes Rs. 98 lakh excise demand on clearance of used refractory brick scrap. *  Service tax demand on irrigation works quashed: Karnataka High Court rules sale of goods component not taxable as service. *  GSTAT restores tax and penalty for transporting iron scrap without E-way bill citing intent to evade tax. *  Madras High Court stays GST recovery from directors without opportunity to show cause under section 89. *  Madras high court stays GST recovery notice against directors; finds prima facie case on applicability of section 79(1)(c). *  Procedural lapses can’t justify harsh punishment without serious customs breach: CESTAT quashes customs broker licence revocation. *  Service tax payable on land leasing and sports complex charges: CESTAT. *  Settled customs dispute can’t be reopened through Article 226 challenge to interest liability: Delhi High Court. *  Mere facilitation of customs clearance can’t establish knowledge of smuggling: Madras High Court. *  GST registration cancellation stayed: Allahabad High Court questions 99% ITC utilisation cap under rule 86B. *  Composition scheme lapses automatically on crossing Rs. 1.5 crore turnover: GSTAT. *  Gujarat High Court quashes GST cancellation orders after officer relied on non-existent AI-generated case laws. *  Importers liable for customs duty benefits availed through manipulated scrips: Delhi High Court. *  Procedural E-way bill lapse alone can’t justify penalty where genuine transaction and absence of tax evasion are established: GSTAT.
Subject News *  Documentary evidence dominates probe, further custody unwarranted: mumbai court grants bail in Rs. 22.44 crore customs duty evasion case. *  Business premises can’t remain sealed for non-participation in GST search: Allahabad High Court. *  GST pre-deposit must be refunded proportionately when taxpayer partly succeeds in appeal: Bombay High Court. *  Supreme Court grants 30 days to file GST appeal; keeps pre-deposit issue open due to deposit in parallel CGST proceedings. *  GST demand can’t exceed amount proposed in SCN: Allahabad High Court quashes Rs. 20.47 Crore order. *  Hundreds-of-crores GST demand and heavy 10% pre-deposit no ground to bypass statutory appeal: Punjab & Haryana High Court. *  Delhi High Court refuses to entertain challenge to gold confiscation due to statutory appeal remedy and unexplained delay. *  Procedural error in customs broker licence inquiry can be rectified through remand: Delhi High Court. *  GSTR-2A mismatch alone can’t justify ITC denial without invoice-wise verification; personal hearing mandatory: GSTAT. *  GST order passed without uploading personal hearing notices violates sec. 75(4): Allahabad High Court. *  TAX EVASION - Sec. 74 GST SCN quashed for not spelling out fraud, wilful misstatement or suppression: Allahabad High Court. *  STPI’s SOFTEX certification and NoC charges taxable as business support services: CESTAT. *  Suspicion can’t replace proof: CESTAT quashes penalty in alleged gold-smuggling operation. *   Limitation runs from communication of order: Madras High Court upholds rejection of delayed GST Appeals. *  Rajasthan High Court quashes GST demand over unsigned show cause notice. *  ITC recovery upheld where supplier failed to deposit GST: Rajasthan High Court. *  Customs commissioner’s empowered to make port trust liable for duty on pilfered goods: Supreme Court. *  Rectification proceedings can’t be used to challenge an uncontested GST assessment through a writ petition: Andhra Pradesh HC. *  GST proceedings against deceased proprietor unsustainable without notice to legal heir: GSTAT. *  Mere availment of ineligible self-assessed ITC doesn’t amount to suppression without evidence of fraud or wilful misstatement: GSTAT. *  Disposal of mining overburden by entity authorised by mining lease holder constitutes taxable service: CESTAT. *  Toll plaza data not mandatory for ITC refund: GSTAT. *  Disputed GST fraud allegations require investigation: Punjab and Haryana High Court makes interim bail absolute in alleged fraud and GST fraud case. *  Non-manufacturer contractor liable to deposit excess excise duty collected from buyer: CESTAT. *  GST order can’t reject taxpayer’s reply as “not satisfactory” without reasons: Madhya Pradesh High Court. *  Uncorroborated statements can’t establish alleged diversion of duty-free goods: CESTAT. *  Erection services were not liable to service tax prior to 10th september 2004: CESTAT. *  Sec. 74 GST notice must spell out statutory ingredients for invoking extended tax demand proceedings: Allahabad High Court. *  No jurisdictional bar under section 6(2)(b) in parallel CGST SGST proceedings: Delhi High Court refuses to bypass GST appeal remedy. *  Madras High Court remits GST demand for fresh adjudication after taxpayer claims it was unaware of SCN following business closure.  

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PJ/Case Laws/2011-12/1501

Imposition of penalty when reasonable doubt exits

Case: C. R. SCOOTERS v/s COMMISSIONER OF CENTRAL EXCISE, VADODRA
 
Citation: 2012 (25) S.T.R. 177 (Tri.- Ahmd)
 
Issue:- Free services provided by Authorised Service station for reimbursement by manufacturer & Commission received from banks for introducing clients for loan – Service tax liability – reasonable doubt regarding levy of service tax – no penalty imposable.
 
Brief Facts:- Appellant has an authorized service station and service tax demand was made on the ground that service tax is payable on the complimentary and warranty service provided to the customers at the cost of motor-vehicle manufacturers and commission/incentive received from the banks or financial institutions in respect of the loans advanced to the customers. Full amount of service tax and interest has been paid and the same is not being disputed also. The period involved is 2002-03 to 30-9-2006.
 
Appellant’s Contention:- Appellant relied upon the several decisions of the Tribunal and clarification issued by the Board to submit that no penalty is imposable on the Appellants, in view of the fact that there were confusion/doubts about the service tax liability in respect of these services.
 
Reasoning of Judgment:- The Tribunal found in the clarification issued by the Board in Circular No. 87/05/2006-ST., dated 6-11-2006 that it has been brought to the notice that certain doubts have arisen in respect to activities undertaken by authorized motor vehicle dealers and service stations. The issues considered by the Board in the Circular was liability of service on free services given by the authorised dealers for which they are reimbursed by the manufacturers and commission/incentive received by them from banks/non-banking financial companies for introducing customers for finance/loans. In the clarification, the Board clarified that service tax is liable to be paid in respect of these two services. From the Circular itself it becomes quite clear that there were doubts/confusion in the field prior to 6-11-2006 and therefore, the claim of the learned counsel that there was reasonable cause for non-payment of service tax since appellant entertained a belief that they are not liable to pay duty.  Further, The Tribunal also found that the Tribunal also took a view that assessees are not liable to penalty in respect of these two services, in various decisions cited by the counsel. In the case of Shri Raj Auto Centre v. C.C.E., Ahmedabad - 2010 (18) S.T.R. 457 (Tri.-Ahmd.), the issue of service tax liability on free services was considered and it was held that no penalty is liable. Similarly, in the case of commissions also, in the decision rendered in the case of Akar Motors - 2010 (20) S.T.R. 481 (Tri.-Ahmd.) a same view was taken. In view of the Circular issued by the Board and in view of the decisions cited above, the Tribunal was of the view that Appellants are not liable to any penalty and Section 80 of Finance Act, 1994 is required to be invoked in this case on the ground that there was sufficient cause for non-payment of duty. Accordingly, appeal is allowed with consequential relief to the Appellants
 
Decision:- Appeal allowed.

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