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of <h1>Tribunal rules in favor of Municipality on tax liability, penalties upheld under Section 77.</h1> <h3>Nagar Palika Prasihad Versus Commissioner of Central Excise, & S.T. Meerut-l</h3> Nagar Palika Prasihad Versus Commissioner of Central Excise, & S.T. Meerut-l - TMI Issues involved:1. Confirmation of demand for the extended period2. Deletion of penalty under Section 76 & 78 of the ActAnalysis:1. The judgment pertains to cross-appeals filed by a Municipality and the Revenue against the Order-in-Appeal dated 25.04.2014. The Municipality received rental income from shops and consideration for advertisements. The Revenue initiated an inquiry in 2010 and issued a show-cause notice in 2012 demanding duty for the period of June 2007 to December 2011. The Municipality did not respond to the notice, leading to an ex-parte order confirming the demand and imposing penalties under Sections 76, 78, and 77 of the Act.2. The Municipality appealed the decision, and the Commissioner(Appeals) partially allowed the appeal, confirming the demand but holding that penalties under Section 76 and 78 were not applicable. However, a penalty under Section 77 of Rs. 10,000 was confirmed. The Municipality contested the confirmation of demand for the extended period, while the Revenue appealed against the deletion of penalties under Sections 76 and 78.3. After hearing both parties, the Tribunal noted that the Municipality is a statutory body under the State Government's control, maintaining proper transaction records. It was observed that the service tax was not paid due to a lack of advice from competent authorities or Revenue. The Municipality registered and started paying service tax after receiving the show-cause notice. The Tribunal found no fraud or suppression by the Municipality and referred to previous decisions where demands for extended periods were not sustained in the absence of misconduct or suppression.4. Relying on precedent rulings, the Tribunal held that the Municipality was not liable to pay tax for the extended period but only for the normal period with interest. The Municipality was directed to calculate and deposit the tax and interest for the normal period within 45 days for verification by the Revenue. The Tribunal allowed the Municipality's appeal and dismissed the Revenue's appeal, maintaining the penalty under Section 77 and allowing appropriation of taxes already paid for the disputed period.
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