Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *   CBIC issues draft rules for Customs valuation *  Top Headlines: Threshold for Benami deals, green bond investors, and more *  Govt aims 1-hour clearance for goods at all ports *  Exporters Allowed To Use RoDTEP, RoSCTL Scrips To Pay Customs Duty, Transfer Them; Rules Amended *  Millions of labourers to be affected by brick producers’ strike over hike in GST, coal rates *  Inauguration of ‘kendriya GST parisar’ *  Transporter can seek Release of Conveyance alone, not Goods under GST Act: Madras HC *  GST: Quoting of DIN Mandatory for Responding to Notice, Govt Modifies Portal *  Firms can soon file claims for GST credits of ?400 cr *  CBIC issues modalities for filing transitional credit under GST. *  Mumbai: Man creates 36 fake GST firms, arrested for input tax credit fraud of Rs 23 cr *  Report to restructure Commerce Ministry under study; idea is to set up trade promotion body: Goyal *  Firms can soon file claims for GST credits of ?400 cr *  Gambling Alert! Govt May Levy Up To 28% GST; UP, Bengal Back Move *  EPFO backs raising retirement age to ease pressure on pension funds *  India Moving Up Power Scale, Set to Become Third Largest Economy By 2030 *  Airfares Get Expensive: What Changes for Flyers From Today? *  IRCTC Latest News: Passengers to Pay More For Cancelling Confirmed Rail Tickets Soon. *  IBC prevails over Customs Act, says Supreme Court. *  As GST enters sixth year, a time for evaluation and reassessment *  There’s GST on daily essentials as Centre needs money to buy MLAs: Arvind Kejriwal *  Now, GST on cancellation of confirmed train tickets, hotel bookings *  GST kitty for top States could rise 20% in FY23, says Crisil *  French customs officials seize another cargo vessel over Russia sanctions *  TradeLens builds on Asia momentum with Pakistan Customs deal *  Hike tax on tobacco, reduce affordability & increase revenue: Civil society organizations to GST council *  Bihar: ?10 crore tax evasion on tobacco products detected in raids *  Centre failed on GST, COVID; would it be anti-national? Rajan on Infosys row *  Service Tax not Chargeable on Income Tax TDS portion paid by recipient: CESTAT grants relief to TVS *  Foreign portfolio investors make net investment of Rs 7575cr in Sep so far
Subject News *  Run-up to Budget: Monetary threshold for GST offences may rise to Rs 25 cr *   GST (Tax) E-invoice Must For Businesses With Over Rs 5 Crore Annual Turnover *   Both Central GST and excise duty can be imposed on tobacco, rules Karnataka high court *   CBIC Issues Clarification On Extended Timelines For GST Compliance *   CBIC Issues Clarification On Extended Timelines For GST Compliance *  Budget 2023- 9.6 crore gas connections *  GST: Tamil Nadu Issues Instructions for Assessment and Adjudication Proceedings *  GST: CBIC Extends Last Date for filing of ITC *  GST collection in September surpasses Rs 1.4 lakh crore for straight seventh time *  Dollar smuggling case: Customs chargesheet names M Sivasankar as key conspirator. *  Hike in GST rates fuels inflation *  Assam: CBI arrests GST commissioner in Guwahati *  GST fraud worth ?824cr by 15 insurance Cos detected *  India proposes 15% customs duties on 22 items imported from UK *  Decriminalising certain offences under GST on cards *  Surge in GST collections more due to higher inflation: India Ratings *  MNRE Notifies BCD and Hike in GST Rates as ‘Change in Law’ Events But With a Condition | Mercom India *   Solar projects awarded before customs duty change allowed cost pass-through *  Rajasthan High Court Dismisses Writ Petitions Challenging Levy Of GST On Royalty *   GST revenue in September likely at Rs 1.45 lakh crore *  Govt working on decriminalising certain offences under GST, lower compounding charge *  Building an institution like GST Council takes time, trashing is easy: Sitharaman *  GST collections in Sept may touch ?1.5 lakh crore *  KTR asks Centre to withdraw GST on handlooms *  After Gameskraft, More Online Gaming Startups To Receive GST Tax Claims *  Madras HC: AAR Application Filed Under VAT Does Not Survive After GST Enactment *  Threshold for criminal offences under GST law may be raised *  Bengaluru: Gaming company faces biggest GST notice of Rs 21,000 crore *  CBIC clarifies Classification of Cranes for GST, Customs Duty *  Customs seize gold hidden in bicycle in Kerala airport  

Comments

Print   |    |  Comment

PJ/Case Laws/2011-12/1291

Penalty under Section 78

Case: COMMISSIONER OF CENTRAL EXCISE, MADURAI v/s M/S L S MILLS LTD.
 
Citation: 2011-TIOL-976-CESTAT-MAD
 
Issue:- Penalty under Section 78 - whether impossible when assessee has paid Service tax along with interest under Section 66A and when amount paid was available as Cenvat credit to assessee?
 
Brief Facts:- Respondent is a manufacturer of cotton yarn and were exporting to various foreign countries. They engaged the services of foreign-based agents for the purpose of procuring orders and ensuring repatriation of sale proceeds. For the services rendered by the said foreign-based agents, they paid commission during the period 08.09.2006 to 02.02.2008.
 
The Original authority vide order dated 04.02.2009 confirmed the demand of duty and imposed penalty under Section 78. On appeal, the Commissioner (Appeals) set aside penalty under Section 78 imposed on the respondents. Hence the department is in appeal.
 
Appellant’s Contention:- Revenue contended that the present dispute relates to demand on the recipient of services in terms of Rule 2(1)(d)(iv) of Service Tax Rules, 1994 for the period after 18.04.2006 i.e., after insertion of Section 66A of the Finance Act, 1994. The stay order by the High Court of Madras staying the operation of Rule 2(1)(d) (iv) relates to the period prior to introduction of Section 66A of the Act which cannot be the basis for bonafide belief by the respondent in not paying the service tax as recipients and, therefore, the Commissioner (Appeals) was wrong in setting aside the penalty.
 
Respondent’s Contention:- Respondent argued that whatever service tax payable by them as recipient was eligible as CENVAT credit to them and, therefore, there could be no intention on their part to evade any service tax. He further stated that, in fact, they have taken CENVAT credit of the service tax paid by them subsequently and taken rebate as well. The decision of the High Court staying the operation of Rule 2 (1)(d)(iv) was the basis for their bonafide belief in not paying service tax during the relevant period.
 
Reasoning of Judgment:- The Tribunal held that in the present case, the service tax demand which is not being disputed has arisen in assessee’s capacity as recipients. It was also not in dispute that whatever service tax paid by them as recipient was available as credit and that they were eligible for rebate of duty on yarn cleared on payment of duty utilizing such credit. While there appears to be merit in the submission of the respondent that the stay order of the High Court in relation to Rule 2(1)(d)(iv) when section 66A was not in force may not apply to the period when Section 66A is in force, the belief entertained by the respondent cannot be held other than bonafide especially in the context of Revenue neutrality as the entire tax paid by them as recipient was available to them as credit. The respondents have not disputed the tax liability primarily on the ground that whatever service tax paid by them was available to them as credit. Under these peculiar facts and circumstances of the case, the view taken by the Commissioner (Appeals) in setting aside the penalty under Section 78 appears to be reasonable and calls for no interference.
 
Decision:- Appeal rejected.
 

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com