TaxTMI 
TaxTMI 
2024 (4) TMI 112
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....and demand of interest at the appropriate rate under Section 75, ibid on Rs. 10,65,330/- at (1) above. 3. I impose a penalty of Rs. 10,000/- (Rupees Ten Thousand only) upon the party under Section 77 of the Finance Act, 1994. 4. I impose a penalty of Rs.10,65,330/- (Rupees Ten Lacs Sixty Five Thousand Three Hundred and Thirty only) upon the party under Section 78 of the Finance Act, 1994, an amount equal to service tax evaded." 2.1 Appellant is providing taxable services under the commercial or industrial building and civil structure, Management Consultant Service, Technical Inspection and Certification, Repair and Maintenance Service, Business Auxiliary Service, and Renting of Immovable Property Service. 2.2 During the course of audit, it was observed that appellant have wrongly adjusted service tax payment to the tune of Rs.10,65,330/- under Rule 6 (3) of Service Tax Rules, 1994 in the month of October, 2010 and November, 2010 as reflected in ST-3 returns for the period October, 2010 to March, 2011. 2.3 Appellant was asked to deposit this wrongly adjusted service tax vide letter dated 23.09.2013 which was replied by the party stating that they had issued credit note dated ....
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....g has been held: "6. It is in this background keeping in mind the object and intendment of the Parliament in enacting this law, the provisions dealing with the penalty have to be considered. Sections 76, 77, 78 and 80 of the Finance Act reads as under :- "Section 76. Penalty for failure to collect or pay Service tax. - Any person liable to pay Service tax in accordance with the provisions of Section 68 or the Rules made thereunder, who fails to pay such tax shall pay in addition to paying such tax, an interest on that tax in accordance with the provisions of Section 75, a penalty which shall not be less than one hundred rupees but which may extend to two hundred rupees for every day during which such failure continues, so, however, that the penalty under this clause shall not exceed the amount of Service tax that he failed to pay. Section 77. Penalty for failure to furnish prescribed return. - If a person fails to furnish in due time the return which he is required to furnish under Section 70 or the rules made thereunder, he shall be liable to a penalty which may extend to an amount not exceeding one thousand rupees. Section 78. Penalty for suppressing value of taxable se....
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....ts to a case of failure to collect or pay Service tax on that particular activity, though he has registered himself under the Act and has filed returns in respect of activity on which Service tax is attracted. In such cases, there is a bona fide dispute whether tax is payable or not and whether a particular activity is construed as a taxable service under the Act. 10. It is in this background that, we have to take note of the fact that when the Service tax was introduced in 1994 for the first time, it had only three taxable services. In every annual Finance Act, different categories of services are brought within the tax net. Even though the expressions "services" and "taxable services" are defined, there may be a doubt whether a particular activity falls within those definitions and is liable to Service tax. It is after a period of time that disputes arose, matters reached judicial forums, doubts cleared and law laid down. It cannot therefore be said that there is any intention to avoid payment of tax by such taxpayers who bona fide believe that their activity is not liable to Service tax. Probably keeping this in mind, the legislature has not only provided for imposing penalty....
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....t there was reasonable cause for the said failure. A clause beginning with "notwithstanding anything" is sometimes appended to a section in the beginning with a view to give the enacting part of the section in case of conflict an overriding effect over the provision of Act mentioned in the non-obstante clause (see Orient Paper and Industries Ltd. v. State of Orissa, AIR 1991 SC 672). A non-obstante clause may be used as a legislative device, to modify the ambit of the provision of law mentioned in the non-obstante clause, or to override it in specified circumstances. (see T.R. Thandur v. Union of India, AIR 1996 SC 1643). The true effect of the non-obstante clause is that in spite of the provision or Act mentioned in the non-obstante clause, the enactment following it will have its full operation or that the provisions embraced in the non obstante clause will not be an impediment for the operation of the enactment (see Smt. Parayankandiyal Eravath Kanapravan Kalliani Amma v. K. Devi AIR 1996 SC 1963). Therefore in order to bring in application of Section 271C in the backdrop of Section 273B. absence of reasonable cause, existence of which has to be established by the assessee, is t....
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....n for the failure referred to in the concerned provision. Thereafter the authority has to consider the explanation offered by the assessee for failure and whether it constitutes a reasonable cause. "Reasonable cause" means an honest belief founded upon reasonable grounds, of the existence of a state of circumstances, which assuming them to be true, would reasonably lead any ordinarily prudent and cautions man, to come to the conclusion that the same was the right thing to do. Only if it found to be frivolous, without substance or foundation, the question of imposing penalty would arise." 3.3 Learned Authorised Representative reiterates the findings recorded in the orders of the lower authorities. 4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument. 4.2 In the impugned order following has been observed for upholding the Order-in-Original:- 6. I have carefully gone through the grounds of appeal, finding in the impugned Order in Original, record of personal hearing and all other materials available on record. The issue involved in the present case is whether the appellant is entitled to claim adjustment of servic....
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.... the contention of the appellant that extended period was not invokable in the case I find that the fact of issue of credit notes on account of poor performance was disclosed by the appellant only when the matter was detected at the time of audit. Prior to that, these facts were not intimated to the department. Hence vital facts on the basis of which demand has been raised and confirmed were suppressed from the department and extended period in the instant case has been rightly invoked." 4.3 Undisputedly, this is the case prior to the notification of Point of Taxation Rules, 2011. During the relevant period the service tax was payable on the amounts received by the service provider against the taxable services provided. Rule 6(3) of Service Tax Rules provided for adjustment of excess service tax paid during the subsequent period, Rule 6(3) is reproduced bellow:- "Where an assessee has paid to the credit of Central Government service tax in respect of a taxable service, which is not so provided by him either wholly or partially for any reason, the assessee may adjust the excess service tax so paid by him (calculated on a Prorata basis) against the service tax liability for the ....
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....he contrary, it is submission of the appellant that the figures stated in the balance sheet for the year 2009-10 wherein the total value of services provided is shown as Rs.24,55,90,004/- instead of Rs.27,63,86,166/- as claimed in the ST-3 returns. After this difference in the true values is on account of the amount refunded by way of issuance of credit note as this amount of Rs.3,24,07,774/- inclusive of service tax of Rs.10,65,330/- was refunded back to their service recipients, the same was excess payment and could have been adjusted as per Rule 6(3) in subsequent returns. 4.6 The view expressed by us is in line with the decisions as follows: A. In the case of Central Mine Planning And Design Institute Ltd. [2014 (36) S.T.R. 328 (Tri. - Del.)], Delhi Bench has held as follows: 5. After hearing both sides, we find that appellant's contention is that this case is covered under Rule 6(3) of the Service Tax Rules whereas Revenue's contention is that Rule 6(3) is not applicable. Rule 6(3) as it existed at the relevant time reads as under : "6(3)......" On going through this sub-rule, we find the excess amount of service tax paid by the assessee can be adjusted against his servic....
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....isions of Rule 6(3) ibid shall become otiose and non-implementable. As the fact that excess payment is not in dispute and same has been adjusted for the future liability of Service Tax by the appellant, therefore, to pay Service Tax is only an exercise which created hurdle in the smooth functioning of imposition and collection, as held by the Tribunal. Therefore, the adjustment can be allowed. 9. In these circumstances, I allow the adjustment of excess Service Tax paid by the appellant during the period 2001 to 2002 for the Service Tax liability to October, 2002 to March, 2003. In the light of these observations, the matter is remanded back to the Adjudicating Authority to make the adjustment of the demand for the period October, 2002 to March, 2003 with the excess payments for the period 2001-02 and pass appropriate order of assessment in accordance with law." C. Mumbai bench in case of Mumbai International Airport Pvt. Ltd [2014 (33) S.T.R. 308 (Tri. - Mumbai)] held as follows: "5.1 The short issue involved herein is whether the appellant could have adjusted the excess Service Tax demand of Rs. 4,17,73,025/- which has been paid under protest. As per Rule 6(3) of Service Ta....
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....nes. 3. The dispute in the present case arose on account of the fact noticed by the Revenue that the assessee had taken suo motu refund of service tax of Rs. 3,17,661/- on account of service tax already paid in respect of the tickets which were cancelled. 4. In appeal, the Commissioner (Appeals) upheld the order passed by the Assessing Officer. However, the Tribunal accepted the appeal filed by the assessee. The contention raised by the assessee before the Tribunal was based on circular dated 26-6-1997 of the Central Board of Excise and Customs (for short, „the Board') and also an order passed in the case of the assessee in Jaipur jurisdiction whereby the claim of refund/adjustment of the service tax on the cancelled tickets was accepted by the department. It was noticed in the circular that cancellation or modification of tickets is a common phenomenon and frequent feature in air travel. Details of cancelled or modified tickets are provided by a travel agent in the fortnightly returns filed and adjustment of the commission is made subject to final approval of the airlines. The commission is ultimately paid by the airlines on the net commission received by a travel agen....