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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/2011-12/1260

Waiver of Penalty u/Sec. 76 - when demand of Service tax with interest confirmed

Case: Commissioner of Service Tax, Bangalore VS Lincoln Helios (India)Ltd
 
Citation: 2011 (23) S.T.R. 112 (Kar)
 
Issue:- Whether penalty imposed under Sec­tion 76 can be set aside when demand of service tax and interest leviable confirmed against respon­dent?
 
Brief Facts: - Respondent-assessee is a manufacturer and supplier of centralized lubrica­tion system and it also undertakes erection and commissioning at site as a part of their business activity. They filed ST-3 return for the period ending 30-9-2003 claiming exemption in respect of erection and commissioning service as the con­sideration paid for the said amount was also included in the excisable value of the final products. The commissioning, erection and service rendered in that connection was brought under the services with effect from 1-7-2003. The as­sessee did not pay the service tax on the value of commission and erection ser­vices on the ground that it forms part of the finished product and that they have paid the excise duty on the same.
 
However, the Assessing Authorities held that the assessee is liable to pay the service tax on the value of erection and commissioning ser­vices. Therefore, they levied the service tax with interest and imposed penalty. Aggrieved by the same, the assessee preferred an appeal, the Commissioner (Appeals) dis­missed the appeal upholding the order passed by the Assessing Authority.
 
In further appeal, the Tribu­nal upheld the levy of service tax but set aside the order regarding imposition of penalty. The assessee has accepted the order of the Tribunal and paid the service tax and interest thereon on the commissioning and erection of services.
 
It is the revenue which has preferred an appeal against the order of the Tribunal challenging setting aside the penalty on the assesses.
 
Appellant’s contentions:- Revenue contends that the penalty payable under Section 76 is automatic and there is no discretion left to the authorities to waive or reduce the penalty payable. More over, the Appellate Tribunal was in total error in coming to the conclusion that there are no mala fides on the part of the assessee without there being any mate­rial on record.
 
Respondent’s contentions:- Assessee contended that the assessee was throughout contending that Assessee has already paid the excise duty on the value of erection and commissioning services and till 26-6-2003, there was no service tax leviable on the said services which was not liable to pay. After contesting the matter before the Tribunal, he accepted the order of the Tribunal and paid the service tax as well as the interest payable thereon. Therefore in those circumstances, he submits that there is no liability to pay penalty as contended by the revenue.
 
Reasoning of Judgment:- The High Court observed that assessee undertakes not only manu­facture and sale of its products but also erects and commissions the finished prod­ucts. The customer is charged for the services rendered as well as the value for manufactured products. Admittedly, up to 20-6-2003 no service tax was leviableon erection and commission work. It was only subjected to tax from 1-7-2003. Assessee has paid the excise duty on the value of the product notwithstanding the services rendered. In that context, they were contending that there cannot be levy of tax under two parliamentary legislations. However, the excise duty was levied on the aspect of manufacture and service tax is levied on the aspect of services rendered. Therefore, it will not amount to payment of tax twice. After contesting the matter before the Tribunal, the Assessee has paid the Service Tax and interest thereon. It is in these circumstances, it cannot be said that there is willful attempt to evade the payment of tax on the part of the Assessee. Assessee gives a reasonable cause for not paying Service tax in view of Section 80. The Tribunal was justified in interfering with the levy of penalty and in setting aside the same. No infirmity found in the order of the Tribunal. Therefore, the substantial question of law framed in this Appeal is answered in favour of Assessee and against the revenue.   
 
Decision:- Appeal dismissed.

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PRADEEP JAIN, F.C.A.

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