TaxTMI 
TaxTMI 
2017 (12) TMI 1672
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....7 and 78 of the Finance Act, 1994 besides appropriation of Rs. 5,00,999/- paid towards Service Tax demanded. Brief Facts : 1.2 Briefly stated the facts of the case are as under : • The applicant was working as a Real Estate Agent in M/s. Subhagruha Projects (India) Pvt. Ltd. (hereinafter referred to as M/s. Subhagruha) Corporate Office, 4th Floor, Lumbini Jewel Mall, Road No. 2, Banjara Hills, Hyderabad-500 018 and was engaged in providing 'Real Estate Agent Service'. • On the basis of specific intelligence that the applicant was receiving 'commission on sales' from M/s. Subhagruha as 'Real Estate Agent' in relation to selling open plots of M/s. Subhagruha and not paying service tax on such commission received, the officers of the DGCEI, HZU, Hyderabad initiated investigation and summonses were issued to the applicant and M/s. Subhagruha calling for the records for verification. • The applicant in response to the summons produced the copies of Income Tax Returns for the periods 2011-12 to 2014-15, Form 26AS for the periods 2011-12 to 2014-15, Form 16A issued by M/s. Subhagruha for the periods 2011-12 to 2015-16 and Bank Statements f....
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....e' provided to M/s. Subhagruha. • During the periods 2011-12 to 2015-16, the applicant had received commission for marketing of plots as under : Year Commission on sales received (Rs.) 2011-12 15,58,420 2012-13 35,65,048 2013-14 79,37,161 2014-15 40,98,453 2015-16 39,50,707 Total 2,11,09,789 • The applicant had not paid any service tax on the above commission amount received by him. He also did not get himself registered with the Service Tax department. The service tax liability for the impugned period worked out to Rs. 22,53,449/-. • After initiation of investigation, the applicant admitted non-payment of service tax on the taxable services provided by him and obtained Service Tax Registration bearing Registration No. AWMPM7670ESD001. He also paid an amount of Rs. 5,00,999/- in cash towards their service tax liability. 1.3 Based on the above, the applicant was issued with the aforesaid Show Cause Notice by the Deputy Director, DGCEI, Hyderabad Zonal Unit. The show cause notice demanded a total amount of Rs. 22,53,449/- towards service tax liability and interest thereon under proviso to Section....
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....adjudication proceedings. The ratio of the above judgment was squarely applicable to the present case and hence no penalty was imposable on the applicant. • In view of the above, the applicant prayed that the Hon'ble Settlement Commission may settle the service tax liability and interest liability at Rs. 22,53,449/- and Rs. 13,02,901/- respectively and grant waiver of penalty and immunity from prosecution in the present case. 2.3 The applicant vide his letter dated 29-5-2017 further stated that he has paid the late fee of Rs. 2,20,000/- for belated filing of ST-3 returns vide Challan No. 80000, dated 29-5-2017. Additional submissions : 2.4 The applicant vide his letter dated 16-6-2017 made the following additional submissions with regard to interest liability : • The applicant was eligible for reduced rate of interest i.e., normal rate of interest reduced by three per cent. as per the proviso to Section 75 of the Finance Act, 1994, for calculation of interest liability on the admitted amount of service tax for the period covered by the show cause notice. • The proviso to Section 75 of the Finance Act, 1994 read as "provided ....
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....onsultant and Shri S.L. Nagaraj, Asstt. Commissioner, Visakhapatnam, represented the Department. 4.2 It was submitted by the Learned Consultant that the applicant joined M/s. Subhagruha Projects (India) Pvt. Ltd., as a real estate agent and marketed open plots in layouts developed by the company in Hyderabad and Visakhapatnam; that he undertook the marketing activity by maintaining his own team of sales boys who interacted with prospective customers and promoted sales of open plots; that he received commission in the form of monetary consideration for the same from M/s. Subhagruha for the years 2011-12 to 2015-16; that he was not aware that such activity is liable for Service Tax; that accordingly he had also not collected any service tax from them; that once pointed out by the department he admitted the entire tax liability of Rs. 22,53,449/- and paid Rs. 5,00,999/- during the course of investigation and the remaining tax liabilities along with interest thereof after issue of SCN and before filing the settlement application; that he also paid the late fee for delayed filing of statutory returns; that while admitting the entire service tax liability and interest thereof, he....
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....13,02,901/-. 5.3 The jurisdictional Commissioner in his report dated 20-7-2017 has stated that the applicant did not dispute the taxability/quantification of the demand made in the SCN and confirmed the payment of entire service tax liability along with interest of Rs. 13,02,901/-. With regard to payment of interest, the Bench observes that the department has not accepted the applicant's plea for reduced rate of interest on the ground that out of the 5 years period (2011-12 to 2015-16) covered in the notice, applicant's taxable turnover exceeded rupees sixty lakhs during the year 2013-14, thus making him ineligible for reduced rate of interest at 3% for determination of interest liability. 5.4 In this regard, the Bench observes that in the Finance Act, 2011, the rate of interest leviable under Section 75 of the Finance Act, 1994 for delayed payment of service tax was increased from 13% to 18%. However vide proviso to Section 75 with effect from 8-4-2011, relief in the form of reduction of 3% interest rate was provided to small service providers whose value of taxable services did not exceed 60 lakh rupees in a financial year. Proviso to Section 75 of the Finance Act....
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....d immunity from imposition of penalty and prosecution. The Commissioner has stated that but for the investigation taken up by the DGCEI, the evasion of service tax by applicant would not have come to light and hence, the applicant is liable for penal actions as proposed in the show cause notice. 5.5 The Bench notes that the applicant had not taken Service Tax Registration and was also not filing ST3 returns during the relevant period and they filed the statutory returns subsequently along with late fee. Non-registration and non-filing of the ST3 returns by the applicant would lead to the conclusion that they have concealed the liability before the assessing authorities and the Bench holds that the applicant is liable for penalty. The Bench also notes that the applicant has made a true and full disclosure of their liability and considering the co-operation extended during the course of proceedings, the Bench is inclined to grant partial immunity from penalty to the applicant. Prosecution : 5.6 In the facts and circumstances of the case, the Bench considers it a fit case for grant of immunity from prosecution to the applicant. ORDER 6.1 In the light of t....