2022 (9) TMI 1284 - AT - Service Tax

Government of Tamil Nadu's Service Tax Penalty Set Aside; Tribunal Cites Lack of Malicious Intent

M/s. State Industries Promotion Corporation of Tamil Nadu Ltd. Versus Commissioner of GST & Central Excise, Chennai

M/s. State Industries Promotion Corporation of Tamil Nadu Ltd. Versus Commissioner of GST & Central Excise, Chennai - 2023 (68) G. S. T. L. 141 (Tri. - ... Issues:Penalties imposed under sec. 78 of the Finance Act, 1994.Analysis:The appellant, an undertaking of the State Government of Tamil Nadu, engaged in land acquisition and development activities, was found to have short-paid service tax under various categories during an audit. The Show Cause Notice proposed demanding the service tax, interest, and penalties. The original authority confirmed part of the demand and dropped part of it, imposing penalties on the confirmed demands. The appellant contested the penalties before the Tribunal.The consultant for the appellant argued that the figures for the demand were obtained from the appellant's accounts, with no evidence of intentional suppression to evade tax. The issue revolved around the classification of services and tax payments. The appellant accepted and paid the demand with interest, emphasizing the lack of malicious intent due to being a State Government undertaking. The consultant cited relevant case laws to support the appeal.The respondent supported the findings in the impugned order, highlighting that the short-payment would not have been discovered without the audit. After hearing both sides, the Tribunal considered the penalties imposed under sec. 78 of the Finance Act, 1994. It was noted that the appellant had accepted the demand related to non-payment of service tax under various services, with interpretational issues arising regarding works contract services and manpower supply services. However, no evidence was presented to prove intentional evasion of tax by the appellant. Given the appellant's status as a State Government undertaking, the Tribunal decided to set aside the penalties under sec. 78, while confirming the demand and interest.In conclusion, the Tribunal relied on the arguments presented by both parties and the case laws cited by the appellant. It held that there was no evidence of deliberate evasion by the appellant and thus set aside all penalties imposed under sec. 78 of the Finance Act, 1994. The impugned order was modified to reflect this decision, allowing the appeal with consequential relief if any.