2017 (12) TMI 447 - AT - Service Tax

CESTAT allows appeal, remands for tax recalculation, grants abatement, waives penalties.

The Appellate Tribunal CESTAT NEW DELHI allowed the appeal, remanding the case for the re-calculation of tax liability. The Tribunal found the appellants ... Abatement - N/N. 1/2006-ST - Commercial or Industrial Construction Service - Held that: - similar issue decided in the case of Hindustan Steel Works Construction Ltd. Versus Commissioner of Central Excise, Raipur [2015 (6) TMI 378 - CESTAT NEW DELHI], where it was held that such abatement should be allowed - the tax liability requires re-calculation by the Original Authority - matter on remand. Penalty - Held that: - the tender proceedings for this contract were initiated before the introduction of tax liability. The appellant, Central PSU, entered into an agreement with another Public Sector Undertaking to execute the work. They have taken registration immediately after being pointed out about the tax liability but discharged the service tax thereafter - there is a reasonable cause for non-payment of service tax in time - penalty set aside by invoking section 80. Appeal allowed by way of remand. Issues: Tax liability under 'Commercial or Industrial Construction Service' for a contract executed for NTPC, Disallowance of abatement under notification no.1/2006-ST, Penalty imposed under Section 76 and 78 of the Finance Act, 1994.The judgment by the Appellate Tribunal CESTAT NEW DELHI addressed the appeal against the order of the Commissioner of Central Excise, Raipur, concerning tax liability under 'Commercial or Industrial Construction Service' for a contract with NTPC. The dispute arose from proceedings initiated due to non-payment of service tax after an inquiry by DGCEI officers. The impugned order held the appellants liable to pay service tax of Rs. 2,42,06,567 for the period 10.09.2004 to 16.06.2006 and imposed penalties under Section 76, 77, and 78 of the Act.The appellant did not dispute their tax liability but contested two points. Firstly, they challenged the disallowance of abatement under notification no.1/2006-ST to determine the taxable value based on the contract. Secondly, they disputed the penalties imposed under Section 76 and 78 of the Finance Act, 1994. The appellant's counsel argued that a previous Tribunal decision supported their eligibility for abatement and that there was a reasonable cause for the delay in payment due to the timing of the contract initiation and tax liability introduction.In response, the Revenue's counsel raised concerns about the verification of payment details claimed after the order was issued. After hearing both sides and examining the records, the Tribunal acknowledged the appellant's tax liability but agreed that they were eligible for abatement under notification no.1/2006-ST based on a previous similar case. The Tribunal also accepted the appellant's argument regarding a reasonable cause for the delay in payment, given the circumstances of the contract initiation and subsequent tax compliance.Consequently, the Tribunal decided to re-calculate the tax liability after considering the abatement and waived the penalties imposed under Sections 76 and 78 of the Finance Act, 1994. The appeal was allowed by remanding the case for the re-determination of tax liability in line with the Tribunal's decision in the appellant's previous case.