TaxTMI 
TaxTMI 
2020 (1) TMI 762
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....ticee of Rs. 200/- per day during such failure continues OR at the rate of two percent of such tax per month whichever is higher. This penalty is applicable in respect of nonpayment of Service Tax for the period April 207 to 10.05.2008 starting from the first day of the due date till the date of actual payment of outstanding amount of Service Tax as the Noticee failed to pay Service Tax in accordance with the provisions of Section 68 of Finance Act , 1994 read with Rule 6 of the Service Tax Rules, 1994, provided that the total amount of the penalty payable in terms of this section shall not exceed the Service Tax payable. iv. I impose a penalty of Rs. 10,000/- (Rupees Ten Thousand only) under Section 77 of Finance Act , 1994 for contravening t6he various provisions of Finance Act, 1994/ Service Tax Rules, 1994. v. I impose a penalty of Rs. 59,13,883/- (Rupees Fifty Nine Lakhs Thirteen Thousand Eight Hundred and Eighty Three only) under Section 78 of Finance Act , 1994. In this regard, the attention of the Noticee is invited to the relevant provisos to Section 78 of Finance Act , 1994 as per which if the service tax determined under Section 73 and the interest paya....
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.... iii. Penalty should not be imposed upon the noticee under the provisions Section 76 of Finance Act, 1994 as amended, for failure to pay Service Tax in contravention of the provisions of Section 68 of Finance Act , 1994 read with Rule 6 of the Service Tax Rules, 1994. iv. Penalty should not be imposed the provisions of Section 77 of the Finance Act , 1994 for contravening of the various provisions of Finance Act, 1994 and Rules made thereunder. v. Penalty should not be imposed the provisions of Section 78 of the Finance Act , 1994 for contravention of the provisions Section 67, 68 & 70 of the Finance Act, 1994 and Rules made there under for suppressing the taxable value, incorrect assessment of Service Tax liability and nonpayment of due Service Tax with intention to evade payment of service tax. 2.4 Show cause notice has been adjudicated by the Commissioner as per impugned order referred in para 1, supra. Aggrieved by the order of Commissioner, appellant's are in appeal before the tribunal. 3.1 In their appeal appellants have challenged the order of Commissioner stating that-. i. The amounts on which service tax has been demanded has been spe....
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....gory of Business Support Services as defined by the Finance Act, 1994. {Reliance placed on decision in case of Capital Transport Convoy Contractor [2016 (41) STR 651 (T-Del)] v. Appellant had never disclosed all these facts to the depart and had also not paid any service tax on these amounts and hence extended period of limitation as provided for by proviso to Section 73(1) has been correctly invoked for making these demand. {reliance placed on decisions in case of Star India Pvt Ltd [2015 (38) STR 884 (T-Mum)] vi. Since appellants have evaded the payment of service tax by suppressing the facts from the department penalty under Section 78 has been rightly imposed. vii. Since appellants have not paid the service tax by the due date penalty under Section 76, till 10.05.2008 too is justified. viii. For various contraventions the penalty under section 77 is justified. 5.1 We have considered the impugned order along with appeals and submissions made during the course of arguments. 5.2 Undisputed and also as admitted by the appellants in their letter dated 07.01.2013 which was in response to the summons issued under Section 14 of Central Excise A....
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....ement and tele-marketing. There are also business entities which provide infrastructural support such as providing instant offices along with secretarial assistance known as "Business Centre Services". It is proposed to tax all such outsourced services. If these services are provided on behalf of a person, they are already taxed under Business Auxiliary Service. Definition of support services of business or commerce gives indicative list of outsourced services." 5.4 From the definition of the Business Support Services as above and the clarification issued it is quite evident that the activities undertaken by the appellant clearly fall within the category of Business Support Services. Same view has been expressed by the tribunal in case of Capital Transport Convoy Contractor [2016 (41) STR 651 (T-Del)]. 5.5 Since the appellants had not disclosed the details of these transactions to the revenue in the ST-3 returns filed by them. Neither they have been able to establish any bonafides in non disclosure of such information to revenue. In case of Capital Transport Convoy Contractor, supra, tribunal has in similar circumstances held as follows: "9. The appellant has contended tha....
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....f the impugned order in appeal dated 25-2-2013 is not sustainable." Same view has been expressed by the tribunal in case of Star India Pvt Ltd [2015 (38) STR 884 (T-Mum)] "5.15 The next issue for consideration is the time-bar aspect. The contention of the appellant since is that they were only required to declare the consideration received in the ST-3 return and in the case of foreign advertisers the consideration was paid directly to Star Hong Kong, there cannot be any misdeclaration on their part. This contention is obviously wrong. In the ST-3 return, there was a column wherein the appellant was required to declare the amount charged to the service recipient, apart from the amount received. As per the agreement, dated 1-4-1999, SIPL was appointed as non-exclusive independent representative in the territory of India to solicit television advertising for the channels, namely, Channel V, Star World, Star Plus, Star News, Star Movies and such other channels as may be added in future and to collect and remit advertisement charges. The responsibility also included delivery of the invoices to the advertisers on a timely basis. Thus the appellant obviously knew the amount charged ....
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....lusion, wilful misstatement, suppression of facts, etc., period of service of notice on the person chargeable with such duty would be five years instead of one year provided in normal circumstances. Nowhere does this provision refer to the period of service of notice after fraud, collusion, wilful misstatement or suppression, etc., comes to the knowledge of the Department. In simple terms, the Department could recover unpaid duty up to a period of five years anterior to the date of service of notice when the case falls under proviso to sub-section (1) and such omission is on account of fraud, collusion, wilful misstatement, etc." Thus in our considered view, the invocation of extended period of time for confirmation of demand is fully justified and we hold accordingly." Hence we uphold the impugned order for invoking extended period of limitation. 5.7 Since the demand of tax has been upheld the demand for interest will follow. It is now settled law that interest under Section 75, is for delay in the payment of tax from the date when it was due. Since appellants have failed to pay the said Service Tax by the due date interest demanded cannot be faulted. In case of P V Vikhe....
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....nder Section 75 of the Finance Act, 1994. 5.8 It is now settled position in law that penalty under section 78 can be imposed only if the ingredients specified in the said section are present. The ingredients specified for invoking the Section 78 are identical to those specified for invoking the extended period of limitation as provided by Section 73 ibid. Since in respect of show cause notice, we hold that demand could have been made by invoking the extended period of limitation as provided by Section 73, we uphold the penalties imposed under Section 78 of The Finance Act, 1994. Hon'ble Supreme Court has in case of Rajasthan Spinning and Weaving Mills [2009 (238) ELT 3 (SC)] held as follows: "23. The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. That is what Dharamendra Textile decides." 5.9 In vie....
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....ation the nature of the penalty, which is punitive, no sentence can be imposed under that provision unless the element of mensrea is established. In most cases of criminal liability, the intention of the Legislature is that the penalty should serve as a deterrent. The creation of an offence by Statute proceeds on the assumption that society suffers injury by and the act or omission of the defaulter and that a deterrent must be imposed to discourage the repetition of the offence. In the case of a proceeding under Section 271(1)(a), however, it seems that the intention of the legislature is to emphasise the fact of loss of Revenue and to provide a remedy for such loss, although no doubt an element of coercion is present in the penalty. In this connection the terms in which the penalty falls to be measured is significant. Unless there is something in the language of the statute indicating the need to establish the element of mens rea it is generally sufficient to prove that a default in complying with the statute has occurred. In our opinion, there is nothing in Section 271(1)(a) which requires that mens rea must be proved before penalty can be levied under that provision. We are supp....
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....ne or both of the offences. However, no circumstances are either pleaded or proved for invocation of the said Section also. In any event we are not satisfied that an assessee who is guilty of suppression deserves such sympathy. As such, we are of opinion that the learned Single Judge was not correct in directing the 1st appellant to modify the demand withdrawing penalty under S. 76. Therefore, the judgment of the learned Single Judge, to the extent it directs the first appellant to modify Ext. P1 by withdrawing penalty levied under S. 76, is liable to be set aside and we do so. The cumulative result of the above findings would be that the Writ Petitions are liable to be dismissed and we do so. However, we do not make any order as to costs." Same view was again expressed by Kerala High Court in case of Lawson Travel and Tours (I)(P) Ltd [2015 (37) ELT 183 (Ker)] as follows: "5. What we notice is, the liability to pay Service Tax is in accordance with the Finance Act, 1994, as the taxable services involved in the matter was for the period from April, 2000 to March, 2004. The decision of this High Court referred above in Krishna Poduval's case (supra) was also prior to Finance A....