2012 (5) TMI 349 - AT - Service Tax

Tribunal grants relief to appellant in Service Tax case, penalties set aside.

The Tribunal set aside penalties imposed on the appellant for non-payment of Service Tax on commissions received as a distributor. The appellant's ... Voluntary payment under Section 73(3) of the Finance Act, 1994 - ST-3 return with late fee and interest - penalties under Sections 76, 77 and 78 of the Finance Act, 1994 - treatment as cum-tax amount - benefit of Notification No.6/2005Voluntary payment under Section 73(3) of the Finance Act, 1994 - ST-3 return with late fee and interest - penalties under Sections 76, 77 and 78 of the Finance Act, 1994 - Whether payment of service tax with interest and filing of ST-3 returns with late fee, relying on Section 73(3), precludes imposition of penalties under Sections 76, 77 and 78. - HELD THAT: - The Tribunal held that the assessee's conduct-paying the service tax liability with interest as soon as omission was pointed out and filing ST-3 returns with late fee-fell within the scope of Section 73(3) of the Finance Act, 1994, which permits payment on the basis of the assessee's own ascertainment and bars issuance of a notice in respect of the amount so paid. The Tribunal followed earlier decisions in Hazarilal Jangid Vs. CCE Nagpur and Saraswati Engineering Vs CCE Nagpur , where it was held that similar voluntary compliance with payment and return filing disentitles imposition of penalties under Sections 76, 77 and 78. Applying that principle, the Tribunal found the penalties could not be sustained and set them aside. [Paras 4, 5, 7]Penalties imposed under Sections 76, 77 and 78 are set aside.Treatment as cum-tax amount - Service Tax not separately collected - benefit of Notification No.6/2005 - Whether the amounts received by the assessee are to be treated as cum-tax amounts and whether relief follows where service tax was not collected separately. - HELD THAT: - The Tribunal accepted the assessee's submission that service tax was not collected separately and that the receipts were evidenced by proper documents. On that basis the assessee's request to treat the consideration as a cum-tax amount was allowed and the assessee was held entitled to consequential relief. The Tribunal also noted that the lower authority had extended the benefit of Notification No.6/2005 in assessing the demand, and granted relief accordingly. [Paras 6]Request to treat the amounts as cum-tax received is allowed and consequential relief granted.Final Conclusion: The appeals result in setting aside the penalties under Sections 76, 77 and 78 of the Finance Act, 1994 as the assessee voluntarily paid the service tax with interest and filed ST-3 returns with late fee under Section 73(3); additionally the assessee's claim to treat receipts as cum-tax amounts is allowed and consequential relief is granted; the Revenue's appeal is rejected while the assessee's appeal is allowed to the extent indicated. Issues Involved: Liability of the appellant to Service Tax on commission received in distribution of pre-paid SIM, Re-charge coupons, Top-up card, and other vouchers as an authorized distributor for M/s Vodafone Essar Gujarat Limited. Applicability of penalties under Sections 76, 77, and 78 of Finance Act, 1994. Benefit of Notification No.6/200-ST, dt.1.3.2005. Waiver of penalties invoking Section 73(3) of Finance Act, 1994. Benefit of cum-duty price under Section 76(2) of Finance Act, 1994.Analysis:1. The issue in this case pertains to the liability of the appellant regarding Service Tax on commissions received for distributing various products as an authorized distributor. The appellant had not paid Service Tax for a specific period, leading to a demand notice from the Service Tax authority. The appellant subsequently paid the due amount along with interest and filed the necessary returns. A Show Cause Notice was issued proposing penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The Order-in-Appeal reduced the Service Tax demand but upheld penalties. Both the Revenue and the assessee appealed.2. The Revenue appealed against the setting aside of the penalty under Section 76 and the appellant sought waiver of penalties under Section 73(3) of the Finance Act, 1994, and the benefit of cum-duty price under Section 76(2) of the same Act.3. During the proceedings, the appellant did not appear, but written submissions were made. The Section 73(3) of the Finance Act, 1994, allows the person chargeable with Service Tax to pay the amount based on their own ascertainment before a notice is served. The appellant's actions were deemed to fall under this section. The Tribunal's decisions in other cases were cited to support the argument that penalties should not be imposed if the Service Tax liability is discharged with interest and late fees.4. The Tribunal found that the penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994, could not be sustained based on the provisions of Section 73(3) and the cited decisions. Therefore, the penalties were set aside. Additionally, the appellant's request to treat the amount received as cum-tax amount was accepted, entitling the appellant to relief on this basis.5. Consequently, the Tribunal rejected the Revenue's appeal and allowed the appellant's appeal to the extent indicated, emphasizing that penalties under Sections 76, 77, and 78 of the Finance Act, 1994, were not sustainable in this case.This detailed analysis covers the issues of Service Tax liability, penalties under specific sections of the Finance Act, benefit entitlements, and the Tribunal's decision based on legal provisions and precedents.