Penalty under Sections 76 and 78 for non-payment of Service Tax by Chartered Accountant firm.

PJ/CASE LAW/2015-16/2656

Case:-HEGDE & ASSOCIATES VERSUSCOMMISSIONER OF SERVICE TAX, MUMBAI

Citation:- 2015 (37) S.T.R. 415 (Tri. - Mumbai)

Issue:-Penalty under Sections 76 and 78 for non-payment of Service Tax by Chartered Accountant firm.

Brief Facts:-Brief facts of the case are that the appellant is a Chartered Accountant and as per the provisions of Section 65(83) of the Finance Act, 1994, services rendered by the Chartered Accountant are liable to Service Tax. A Show Cause Notice was issued to the appellant demanding Service Tax of Rs. 10,610/- in respect of the amounts received from M/s. Dover India Pvt. Ltd. The adjudicating authority confirmed the demand with interest and imposed penalties under Sections 76 and 78 of the Finance Act, 1994. The appellant filed appeal against the order of the adjudicating authority before the Commissioner (Appeals) and the Commissioner (Appeals) dismissed the appeal.

Appellants Contention:-The learned counsel for the appellant submitted that Mr. Sridhar Hegde, who was running the Chartered Accountant’s firm has expired. On merits, it is the contention of the appellant that the appellant had not provided any taxable service in respect of the amount in dispute, rather the appellant received the services from other professionals such as Mr. P.K. Shetty, advocate. The appellant also submitted that as the amount of Service Tax has already been paid, therefore, the appellants are only contesting penalties imposed under the impugned order. The appellant also submitted that some of services are not covered under scope of Section 65(83) of the Finance Act, 1994. The appellant relies upon Notification No. 59/98-S.T., dated 16-10-1998 as amended. The contention is that services regarding which Service Tax is demanded were rendered in respect of Central Excise, VAT, Sales Tax matters. The contention is that as per Notification No. 59/98-S.T. there is exemption to the taxable service provided by a practicing Chartered Accountant in his professional capacity to the client other than the services relating to cost accounting and audit cost accounting and audit etc. The demand is in respect of the services which are not covered under the Notification. In support of the contention appellant produced some copies of invoices. Protection under Section 80 of the Finance Act, 1994 is also sought in view of the Notification No. 59/98-S.T. as the appellants were under the bona fide belief that the activities undertaken by the appellants are not covered under the provisions of Section 65(83) of the Finance Act, 1994.

Respondents Contention:-The Revenue relies upon the finding of the lower authority and submits that as the appellant had not produced any evidence in support of their contention, therefore the appellants are liable to penalties and as the appellant being the Chartered Accountant firm and rendered services to their clients and hence the impugned order is rightly passed.

Reasoning of Judgement:- The tribunal find that the appellants are not challenging the Service Tax liability but only challenging the imposition of penalties. Tribunal find as per the provisions of Section 80 of the Finance Act, 1994 which provides notwithstanding anything contained in Sections 76, 77 and 78 no penalty shall be imposable on the assessee for any failure referred to in said provisions, if the assessee proves that there was reasonable cause for the said failure. As per the provisions of Notification No. 59/98-S.T., dated 16-10-1998 the activity undertaken by practicing Chartered Accountant other than covered under the Notification are exempted from tax. The appellant produced a copy of the sample invoice whereby the amount is collected for the services rendered on Central Excise matters from M/s. Dover India Pvt. Ltd. In these circumstances, particularly taking into consideration as Mr. Sridhar Hegde now expired, the tribunal find that it is not a case for imposition of penalty, in view of the provisions Section 80 of the Finance Act, 1994. The penalties imposed under Sections 76 and 78 of the Finance Act, 1994 are set aside

Decision:-Appeal disposed off.

Comment:-The crux of the case is that a Chartered Accountant firm that provides services covered under the provisions of Notification no.59/98-S.T.,dt.16-10-1998 is only liable to pay service tax. In the present case, the benefit of section 80 was extended wherein the penalties imposed on the assessee were dropped on sympathetic grounds as the CA running the Chartered Accountants firm had been expired.

Prepared By:- Neelam Jain

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PJ/CASE LAW/2015-16/2656

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