TaxTMI 
TaxTMI 
2018 (11) TMI 1292
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....appellants were receiving "Intellectual Property Services" and "Management Consultancy Services" from their principals in UK and have not paid service tax on the same. Therefore a show-cause notice dt. 29/04/2008 was issued to the appellants seeking to confirm the service tax of Rs. 2,63,93,807/- along with interest while proposing for imposition of penalties under Sections 76, 77 and 78 of the Finance Act. The show-cause notice also proposed to appropriate Rs. 83,98,501/- and Rs. 5,28,393/- paid by them towards duty and interest. Commissioner, LTU vide order dt. 24/10/2008 has confirmed the demands as per the show-cause notice. Hence this appeal. 2.1. Learned counsel for the appellants has submitted that it is a settled position of law ....
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.... 77 and 78 is not automatic when the assessee had a honest and reasonable cause for non-payment of tax. 2.3. Regarding the intellectual property services, the learned counsel submitted that it is undisputed fact that Fosroc International Ltd. has not registered a trade mark / copy right in India. Since the trade mark /copy right etc. was not registered in India, the appellant was of the belief that it is not liable to pay service tax under reverse charge mechanism. The appellant has paid the applicable service tax for services received on or onwards 18/04/2006 only on the ground that it was entitled to CENVAT credit and the demand of tax would be revenue neutral. Therefore in view of the following cases, penalty is not warranted. a. U....
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....pellants have paid penalty of 25% before the issuance of show-cause notice. They had a reasonable belief for the reason that the liability of the service recipient to pay service tax under the reverse charge mechanism was in doubt for everyone in the field during the relevant period. It was only after the Supreme Court's decision in the Indian National Shipowners case (supra), the issue had attained finality. It can be seen that the so called management consultancy was limited to supply of books or operating manuals by their principals. It at its best falls under executor function as submitted by learned counsel for the appellants. Even in respect of intellectual property service, it was submitted that the same was not paid under the reason....
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.... Service tax authorities not to impose penalty if there is reasonable cause in given case, the imposition of penalty under Sections 76, 77 and 78 is not automatic. The existence of grounds/ingredients postulated in the said provisions is a condition precedent for attracting penalty. Therefore, first, we have to find out whether in the facts of a given case whether those ingredients exist. Once it is held that those ingredients exist and the provisions are attracted, then if the language used in the said provisions do not leave any discretion in authority in the matter of imposition of penalty, penalty is to be imposed in terms of the said provision. However, if any discretion is left, then the said quasi judicial discretion is to be exercis....