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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 Law/2013-14/1609

Provisions of section 80 applicable in case of bonafide belief.

Case:-VASCON ENGINEERING PVT LTD Vs C.C.E., CHANDIGARH
 
Citation:-2013-TIOL-838-CESTAT-DEL
 
Brief Facts:- Brief facts of the case are that the assessee is registered for service tax under "Commercial and Industrial Construction" and "Residential Complex Construction Service' with effect from 10.9.2004 and 16.6.2005 respectively. It was observed by the department that assessee received an amount on account of Maintenance and Repair of immovable property of their client M/s Cipla Ltd., Baddi during the period May 2006 to December 2006. It was contention of the Department that services provided by the assessee falls under Category of Management, Maintenance and Repair service and is taxable with effect from 1.5.2006. Abatement of 67% of taxable value availed by the assessee under Notification No. 1/2006 dated 1.3.2006 is applicable to Commercial and Industrial Construction Service only and not to Management, Maintenance and Repair service. Accordingly, a Show Cause Notice demanding service tax short paid by them was issued. Notice was adjudicated by Joint Commissioner who vide his Order-in-Original confirmed the service tax along with interest. Penalties under Section 76 and Section 78 were also imposed on the assessee. Assessee filed an appeal before Commissioner (Appeals) who vide the impugned order set aside the penalty imposed under Section 76 of the Act and penalty imposed under Section 78 of the Act was reduced to 25% of tax amount. Assessee has challenged this order before this Tribunal in the present appeal. Revenue has also challenged the impugned order on the ground of reduction of penalty.
 
Appellant’s Contention:- The appellant submits that they are engaged in activity of construction of buildings and are covered under Commercial and Industrial Construction service and also doing repairs of buildings. Repairs of building is covered under Section 65(25) of the Finance Act and not under 65(64) of the Act as contested by Revenue. He fairly submits that since amount is small and they have paid the service tax along with interest as early in Feb. 2008, they are not contesting service tax but there is no case for imposition of penalty on them. He submits since there are two interpretations about classification of service under 65(25b) and 65(64) there is reasonable cause for failure of payment of service tax and benefit of Section 80 of the Finance Act is applicable to them.
 
 
Respondent’s Contention:- On the other hand, ld. DR submits that original authority has rightly imposed the penalty equal to tax amount and it was not proper for Commissioner (Appeals) to reduce it to 25% of tax amount.
 
Reasoning of Judgment:- After hearing both sides, we find that assessee was paying service tax under category of Commercial and Industrial Construction and Residential Complex Construction Service prior to 1.5.2006. Service tax on maintenance and repairs was also being paid by them under Section 65(25) of the Finance Act after availing abatement of 67% under Notification No. 1/2006 dated 1.3.2006, Revenue demanded service tax short paid by them under Maintenance and Repair under Section 65(64) of the Finance Act. As ld. Advocate for assessee not contesting the demand of service tax as amount is small and tax along with interest already paid by them, we are not going into question of classification of Maintenance and Repair activity involved in this appeal.
 
We find that assessee was under bona fide belief that maintenance and repair of building was covered under Section 65(25)(b) and service tax was being paid by them. We are therefore of the view that there is reasonable cause for not paying service tax short paid by them and benefit of Section 80 of the Finance Act 1994 is available to the assessee. Accordingly, we set aside the penalty confirmed by the Commissioner (Appeals) and consequently reject the Revenue's appeal.
 
Decision:- Revenue's appeal is rejected and assessee's appeal is allowed in respect of penalty only.
 
 
Comment:- The essence of this case is that if short payment of service tax was on account of bonafide belief and  the said short payment was paid along with interest, then the benefit of Section 80 of the Finance Act 1994 will be available to the assessee.

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