2024 (4) TMI 675 - AT - Service Tax

Penalties Reduced Due to Family Circumstances; SVLDRS Scheme Immunity Not for Co-Noticees, Section 78A Prospective.

Manjeet Kaur and Shri Ishan Singh Versus Commissioner of Central Excise & Central Goods, Service Tax, Udaipur

The Tribunal partially allowed the appeals, modifying the penalties under Section 78A of the Finance Act, 1994. It recognized the appellants' family ... Levy of penalty upon both the appellants, being the Director/ Authorized Signatory in terms of Section 78A of Finance Act, 1994 - benefit of Section 124 (1) (b) of SVLDRS - HELD THAT:- Apparently and admittedly, it was the main co-noticee i.e Wisdom Guards Pvt. Ltd. who has been issued the discharge certificate (SVLDRS Form No. IV) under the SVLDRS, Scheme, 2019. There are no such provision in the scheme which may extend immunity to the other co-noticees because of the discharge certificate in favour of the one of the co-noticee. Hence, the said contentions of the appellant not agreed upon. Coming to the another aspect of Section 78A of Finance Act to have been introduced only w.e.f. 10.05.2013, we hold, based upon the settled position of law, that all provisions of statute have to be given prospective effect unless and until, they are expressly made to apply retrospectively. Section 78A of the Act is perused. There is nothing in the Section to reflect that the section has to be applied retrospectively - the section can be invoked w.e.f. 10.05.2013. The period involved in the present appeal is 2011-2012 to 2013-2014. Hence, it is clear that the periods is pre as well as post the insertion of Section 78A in the impugned Act - there are no reason to extend any benefit of said provisions to the appellant. Appeal allowed in part. Issues involved: Adjudication of penalty under Section 78A of Finance Act, 1994 for non-payment of service tax by appellants engaged in Security Agency Services.The facts of the case involve the appellants, who are the Director and Authorized Signatory of a firm providing taxable services, specifically Security Agency Services. They were found to have collected tax on services but failed to deposit it in the Government Account. A Show Cause Notice was issued proposing recovery of Service Tax along with penalties. The appellants contested the penalty imposed under Section 78A of the Finance Act, 1994.The main contention raised by the appellants was that the main noticee had settled under the Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019, and argued that the liability of the appellants should be absolved as co-noticees. They also highlighted personal circumstances, such as a family member's chronic illness, as reasons for their inability to manage the business effectively, attributing any mistakes to their staff.In response, the Authorized Representative argued that there is no provision in the SVLDRS Scheme to grant immunity to co-noticees if one party settles under the scheme. It was emphasized that Section 78A of the Finance Act, 1994, was incorporated in 2013 and should be applied prospectively. The Representative contended that the penalty was justified due to the appellants' involvement in malafide practices of non-payment of service tax.Upon review, the Tribunal found that the SVLDRS Scheme only extends immunity to the individual who applies under it, not to co-noticees. Regarding Section 78A, the Tribunal held that it should be applied from its introduction in 2013, and in this case, the penalty was imposed for a period both pre and post the insertion of Section 78A. Despite upholding most findings, the Tribunal acknowledged the appellants' family circumstances and reduced the penalty imposed on each appellant to Rs. 50,000.In conclusion, the order imposing penalties under Section 78A of the Finance Act, 1994, was modified, and the appeals were partly allowed, considering the mitigating circumstances presented by the appellants.