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of <h1>Indian Govt. Enterprise Wins Tax Waiver Appeal Due to Reasonable Cause</h1> The Tribunal found in favor of the appellant, a Govt. of India Enterprise, in a case concerning the waiver of pre-deposit of penalty for alleged ... Storage and warehousing service - non-payment of Service tax on storage and warehousing service rendered in relation to empty containers on ground of reasonable belief that applicants are not required to pay Service Tax on handling of empty containers - Held that:- Service Tax on storage and warehousing service was introduced in the year 2003. It is not in dispute that they were paying Service Tax on handling and storage of loaded containers. However, due to reasonable belief they could not pay Service Tax on empty containers and they did not have any mala fide intention to avoid/evade Service Tax which is supported by order of adjudicating authority. Appellants are able to show that there was reasonable cause for the failure to pay Service Tax on empty containers. Therefore the penalty imposed u/s 76 is set aside and appeal is allowed with consequential relief. Issues:- Waiver of pre-deposit of penalty- Liability for Service Tax on handling of empty containers- Applicability of reasonable cause under section 80 of Finance Act, 1994- Imposition of penalty under section 76Analysis:The appellant sought waiver of pre-deposit of penalty amounting to Rs.1,25,420, contending that they had already paid the total Service Tax along with interest. The case involved the appellant, a Govt. of India Enterprise, providing storage and warehousing services, including handling of empty containers. The dispute arose when the department alleged non-payment of Service Tax on handling of empty containers. The lower adjudicating authority confirmed the demand and imposed an equal penalty under section 76 of the Finance Act, 1994. The appellant argued that their reasonable belief, supported by the absence of mala fide intention, constituted a reasonable cause under section 80 of the Act, justifying the non-payment of Service Tax on empty containers.The appellant's contention was that they had been compliant with their tax obligations for storage and warehousing services, and their misunderstanding regarding the applicability of Service Tax on handling empty containers was due to a reasonable belief, not an intention to evade taxes. The appellant highlighted that the Service Tax on storage and warehousing was introduced in 2003, and they did not act with mala fide intent. On the other hand, the Revenue argued that the appellant, being aware of their Service Tax registration obligations, did not have a valid reasonable cause under section 80 of the Finance Act, 1994, for failing to pay the tax on handling and storage of empty containers.After considering the submissions and examining the records, the Tribunal found merit in the appellant's argument. The Tribunal noted that the appellant's failure to pay Service Tax on empty containers was due to a reasonable cause, as they did not possess any mala fide intention to evade taxes. The Tribunal referred to the lower adjudicating authority's finding that no penalty should be imposed under Section 78 due to the absence of mala fide intention. Consequently, the penalty imposed under section 76 was set aside, and the appeal was allowed with any consequential relief as per the law. The stay petition was also disposed of in favor of the appellant.
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