Non payment of service tax due to litigation pending in High Court.

PJ/CASE LAW/2015-16/2900

Case:-CAMEX REALITY PVT. LTD. VERSUS COMMR. OF SERVICE TAX, AHMEDABAD

Citation:- 2014 (36) S.T.R. 444 (Tri. - Ahmd.)

Brief Facts:-This appeal has been filed by the appellant against OIA No. 289/2011(STC)/K.ANPAZKHAN/Commr.(A)/Ahd, dated 21-11-2011. The issue involved in these proceedings is that the appellant did not pay the Service Tax on renting of immovable property in view of litigation going on in the Delhi High Court in the case of Home Solution Retail India Ltd. v. UOI [2009 (14) S.T.R. 433 (Del.) = 2009 (237) E.L.T. 209 (Del.)]. When the issue was settled by the High Court, appellant paid the entire Service Tax of Rs. 2,14,403/- along with interest of Rs. 60,667/-. It is now the case of the appellant that no penalty under Section 76 of the Finance Act, 1994 should be imposed.

Appellants Contention:-Shri. Jigar Shah (Adv.) appearing on behalf of the appellant argued that appellant had specifically mentioned in their ST-3 return for the relevant period that appellant had stopped payment of Service Tax in view of Delhi High Court’s order and hence there cannot be any intention to evade payment of duty and as per Section 80 of the Finance Act, 1994 no penalty is attracted when a reasonable cause is shown. He relied upon the following case laws of CESTAT :-
(i)        Euro Ceramics Ltd. v. C.C.E., Rajkot [2013 (32) S.T.R. 642 (Tri.-Ahmd.)].
(ii)       Shri Punit Kumar Shah & Others v. CCE, Vadodara-II - Order Nos. A/11809-11982/2013, dated 19-12-2013 in Appeal No. ST/13625 to 13628/2013-DB.
(iii)      Shri Sanjeev Kumar Vasal & Others v. CCE, Chandigarh - Order Nos. 58130-59132, dated 24-10-2013 passed by CESTAT, Delhi in Appeal No. ST/58266-58268/2013-CU(DB).

Respondents Contention:- Shri Jitendra Nair, (AR) appearing on behalf of the Revenue defended the order passed by the first appellate authority.

Reasoning Of Judgement:-Heard both sides and perused the case records. The issue involved in the present proceedings is whether penalty should be imposed upon the appellant when the entire amount of disputed Service Tax and interest for the delayed payment has already been paid. It is the case of the appellant that a clear remark was made in the ST-3 return of the relevant period that appellant has stopped paying Service Tax in view of Delhi High Court’s order. This fact is not disputed as per Para-2 of the OIA dated 17-11-2011-21-11-2011 passed by the first appellate authority. There is also no evidence on record that Service Tax was separately recovered by the customers from their clients and kept with him. In view of Delhi High Court’s order, appellant has a reasonable cause for not paying the Service Tax. The same was paid, along with interest, as per the provisions of Section 80(2) inserted w.e.f. 28-5-2011. In view of the above observations and the settled position as per the relied upon case laws, it is held that no penalty was attracted upon the appellant in this case and appeal filed by the appellant is required to be allowed.
Appeal filed by the appellant is allowed.

Decision:-Appeal allowed.

Comment:-The crux of the case is that if the assessee has not made the payment of service tax due to pending litigations before the high court and also specifically intimated this fact in ST 3 return of the relevant period, penalty cannot be imposed on them. Also,as there is no evidence on record that Service Tax was separately recovered from the customers so it cannot be held that the assessee have any intention to evade payment of duty. Accordingly as per Section 80 of the Finance Act, 1994 no penalty is attracted and the appeal was allowed as entire service tax along with interest was paid as per provisions of section 80 (2) of the Finance Act.

Prepared By:- Neelam Jain

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PJ/CASE LAW/2015-16/2900

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