whether penalty to be imposed on non payment of service tax?

PJ/CASE LAW/2014-15/2470

Case: -RADIO MID DAY WEST (INDIA) LTD Vs COMMISSIONER OF SERVICE TAX, MUMBAI-I

Citation: -2014-TIOL-2326-CESTAT-MUM

Brief facts: -The brief facts of the case are that the appellant are provider of taxable services. An audit was conducted in the factory of the appellant in February 2008 and it was found that the amount deducted on account of income tax as TDS was not included in the taxable value. Therefore, there was a short payment of service tax. Accordingly, impugned proceedings were initiated invoking the extended period of limitation. The appellant immediately paid the amount of differential service tax along with interest but show-cause notice was issued for imposition of penalty under various provisions of the Finance Act, 1994. The Commissioner imposed a penalty under Section 76, 77 and 78 of the Finance Act, 1994. Aggrieved from the order of imposition of penalty, appellant is before the commissioner

Appellant’s contention: -The ld. CA appearing on behalf of the appellant submits that the appellant inadvertently failed to include the amount of TDS in the taxable value of services. Therefore, the benefit of Section 80 of the Finance Act, 1994 is to be given to them and accordingly, penalty be set aside.

Respondent’s contention: -ld. AR reiterates the impugned order

Reasoning of judgment: -In this case, after going through the facts of the case, the only error committed by the appellant is that they have not included the amount of TDS deducted at the time of calculating the taxable service. That may be due to the ignorance of law. Therefore, appellant are entitled to benefit of Section 80 of the Finance Act, 1994. Accordingly, as per Section 73 (1) of the Finance Act, 1994, the appellant were not required to be issued show-cause notice for imposition of penalty. Accordingly, after giving benefit of Section 80, the imposition of penalty against the appellant under various provisions of the Finance Act, 1994 has been set aside

Decision: -Appeal disposed of

Comment:- the gist of the case is that the error committed by appellant was due to ignorance of law and thus he will entitled to benefit of section 80 of the FA, 1994 and as per Section 73(1), there shall be no requirement to issue SCN for imposition of penalty.

Prepared By: - Lovina Surana

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PJ/CASE LAW/2014-15/2470

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