TaxTMI 
TaxTMI 
TaxTMI 
Dear Professional Colleague,
If there was no malafide for the purpose of penalty, there cannot be any malafide for the purpose of limitation also
We are sharing with you an important judgment of the Hon’ble CESTAT, New Delhi, in the case of Internet Computer Centre Vs. CCE, Lucknow [2014 (12) TMI 663 - CESTAT NEW DELHI] on following issue:
Issue:
whether malafide for the purpose of limitation is possible, when there is no malafide for the purpose of penalty?
Facts and background:
In the instant case, Internet Computer Centre (“the Appellant”) availed the benefit of Small Scale Exemption under erstwhile Notification No. 6/2005-ST dated March 1, 2005 (“SSI Notification”) which was denied by the Lower Authorities on the ground that the services rendered by the Appellant are branded services and the same is excluded from the applicability of the SSI Notification. Therefore, the Lower Authorities confirmed the demand of Service tax of ₹ 98,064/- and imposed penalty of ₹ 50,000/- under Section 76 of the Finance Act, 1994 (“the Finance Act”) on the Appellant by invoking extended period of limitation.
On appeal being filed to the Commissioner (Appeals), the Commissioner (Appeals) set aside the penalty imposed upon the Appellant on the ground that the Appellant was under the bonafide belief that they are entitled to the benefit of the SSI Notification and that on being pointed out by the Department, the Appellant paid the due tax and interest before issuance of Show Cause Notice. Thus, there was no malafide intent on the part of the Appellant and penal action is not justifiable. However, the demand of Service tax was confirmed against the Appellant.
Being aggrieved, the Appellant filed an appeal before the Hon’ble CESTAT, Delhi on the ground of limitation.
Held:
The Hon’ble CESTAT, Delhi held that if there was no malafide for the purpose of penalty, there cannot be any malafide for the purpose of limitation also. Accordingly, the matter was decided in favour of the Appellant and the demand being barred by limitation was set aside.
Hope the information will assist you in your Professional endeavors. In case of any query/ information, please do not hesitate to write back to us.
Thanks and Best Regards,
Bimal Jain
FCA, FCS, LLB, B.Com (Hons)
Flat No.34B, Ground Floor, Pocket - 1,
Mayur Vihar, Phase–I,
Delhi – 110091
Desktel:+91-11-22757595/ 42427056
Email: [email protected]
Web: www.a2ztaxcorp.com
Disclaimer: The contents of this document are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the authors nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this document nor for any actions taken in reliance thereon.
Readers are advised to consult the professional for understanding applicability of this newsletter in the respective scenarios. While due care has been taken in preparing this document, the existence of mistakes and omissions herein is not ruled out. No part of this document should be distributed or copied (except for personal, non-commercial use) without our written permission.