2018 (9) TMI 1062 - AT - Service Tax

Tribunal waives penalties under Section 80 due to amendment confusion

The Tribunal partially allowed the appeal, setting aside the penalties imposed on the appellant due to confusion caused by an amendment and the reasonable ... Penalty relief under Section 80 of the Finance Act - reasonable cause for failure to discharge tax liability - confusion caused by amendment of statutory provisions - registration of assesseePenalty relief under Section 80 of the Finance Act - reasonable cause for failure to discharge tax liability - confusion caused by amendment of statutory provisions - registration of assessee - Whether the penalties imposed on the appellant should be set aside by invoking Section 80 of the Finance Act on the ground of reasonable cause arising from confusion due to amendment, having regard to the assessee's registration - HELD THAT: - The Tribunal declined to examine the substantive demand because the appellant did not press the appeal on merits. The Tribunal accepted the appellant's contention that an amendment created confusion in the appellant's mind regarding the levy, and noted that the appellant had obtained registration, a fact not disputed by Revenue. On these findings the Tribunal held that there was reasonable cause for the failure to discharge the tax liability and that the discretionary relief under Section 80 was therefore available. Consequently, the penalties upheld by the lower appellate authority were set aside. [Paras 5, 6]Penalties set aside by invoking Section 80 of the Finance Act on the basis of reasonable cause; appeal otherwise not pressed on merits.Final Conclusion: The appeal is partly allowed: the Tribunal set aside the penalties in consequence of finding reasonable cause under Section 80 (having noted confusion from the amendment and undisputed registration); the substantive tax demand was not adjudicated as the appellant did not press that part of the appeal. Issues: Appeal against levy of Service Tax, exclusion of taxable value, principle of 'cum tax value' applicability, interest levy, penalty under various sections, waiver of penalties, confusion due to amendment in Section 65(25A).Analysis:1. Levy of Service Tax: The appellant sought relief from the impugned order related to the levy of Service Tax for the period from May 2011 to March 2012 in respect of Hire charges of Boats used for entertainment purposes. The appellant requested the exclusion of the value of Daily receipts received from tourists from the taxable value. The Tribunal did not delve into the merits of this issue as the appellant was not pursuing the appeal on its merits.2. Principle of 'Cum Tax Value': The appellant also requested the application of the principle of 'cum tax value' and the revision of the quantum of Service Tax. However, since the appeal was not pressed on merits, this aspect was not further discussed by the Tribunal.3. Interest Levy and Penalties: The appellant sought to set aside the levy of interest under Section 75 of the Act and penalties imposed under various sections. The Tribunal acknowledged the confusion caused by an amendment in Section 65(25A) and the reasonable cause for the failure to discharge tax liability. Consequently, the penalties were set aside based on the provisions of Section 80 of the Finance Act.4. Waiver of Penalties: The appellant requested the waiver of penalties under Section 80 of the Finance Act, citing reasonable cause and being a Charitable Institution. The Tribunal agreed that there was a reasonable cause for the confusion and set aside the penalties accordingly.5. Conclusion: The Tribunal partially allowed the appeal, setting aside the penalties upheld by the lower appellate authority due to the confusion caused by the amendment and the reasonable cause for the failure to discharge tax liability. The operative part of the order was pronounced in open court, concluding the matter in favor of the appellant on the issue of penalties.