TaxTMI 
TaxTMI 
2026 (9) TMI 282
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....TAT's Miscellaneous Order dated 30.06.2023 ['Impugned Order 2'] whereby a reduced penalty of Rs. 4,50,000/- under Section 78 of the Finance Act was imposed on the Appellant. 3. Initially, Commissioner of Service Tax (Adjudication) vide order dated 31.03.2014 raised a demand of service tax for Rs. 65,75,890/- along with interest for longer period of five years by invoking proviso to Section 73(1) of the Act of 1994 [April 01, 2005 to March 30, 2010], demand of CENVAT [Central Value Added Tax] credit of Rs. 12,360/- along with interest, and imposed a total penalty of Rs. 65,93,250/-. 3.1. The breakdown of penalty amount was Rs 65,75,890/- under Section 78 of Act of 1994 + Rs. 5000/- under Section 77 of Act of 1994 + Rs.12,360/- under Rule 15 of the Credit Rules read with Section 78 of the Act of 1994. 4. This order dated 31.03.2014 was challenged before CESTAT, which led to the passing of the Impugned Orders 1 and 2. 5. Pertinently, challenge to the demand of recovery of CENVAT credit of Rs. 12,360/- along with interest as well as penalty of Rs. 12,360/- was not pressed before CESTAT and therefore this demand has attained finality. Similarly, the challenge to levy of....
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....ssed to Senior Audit Officer, CAP-IV, stated that the Appellant was engaged in providing construction service to medical and educational institutions as per Medical Council of India norms. The Assistant Commissioner relied upon CBEC Circular No. 80/10/2004-ST dated 17.09.2004 [Annexed as Annexure -10 along with the present appeal] ['CBEC Circular'] to contend that constructions for institutions established solely for educational, religious, charitable, health, sanitation or philanthropic purposes and not for profit, was non-taxable being non-commercial. 8.5. It is stated that the Assistant Commissioner of Service Tax, Div.-I, Delhi, thereafter sought information from Guru Ghasidas University, Bilaspur, one of the recipients of the Appellant's services, as regards the nature of services rendered by the Appellant. 8.6. It is stated that similarly the Deputy Commissioner of Service Tax, Div-I, Delhi, also, by communication dated 20.11.2007 addressed to Senior Audit Officer, CAP-IV, reiterated that payment of amount of Rs. 1,07,38,000/- paid by Guru Ghasidas University to the Appellant during 2004-05 was towards the construction and supervision of the medical college, dental ....
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....e Appellant has thus accepted the levy of service tax for the normal period of limitation. 8.13. It is stated that since the Impugned Order 1 did not deal with the question of penalty amount of Rs. 65,75,890/- imposed under Section 78 of Act of 1994, the Appellant filed an application for Rectification of Mistake ['ROM']. Vide a Miscellaneous Order dated 30.06.2023 ['Impugned Order 2'], CESTAT reduced the penalty amount to Rs. 4,50,000/-. The Appellant has in the written submission confined the challenge to the levy of this penalty amount. It is thus, Impugned Order 2 which is the subject matter of the present appeal. SUBMISSIONS ON BEHALF OF THE APPELLANT 9. Dr. Prabhat Kumar, learned counsel for the Appellant, stated that the penalty of Rs. 4,50,000/- is challenged on the ground that there was a bona fide understanding of the Appellant regarding classification and taxability of the income earned by the Appellant for the services provided to Government Hospitals and Educational Institutions. This view was also supported by the Service Tax Department itself, which had earlier consistently taken the view that the said services were non-taxable. 9.1. He contended that the....
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....ropriately classifiable as 'Architect's Services' under Sections 65(6) and 65(105) (p) of the Act of 1994 and, where applicable, as 'Management or Business Consultancy Service' under Sections 65(65) and 65(105) (r) of the Act of 1994. 10.3. He further stated that the Appellant's reliance on internal departmental correspondence between the Department and the Accountant General Central Revenue ['AGCR'] to contend that the Department itself had treated the services as construction services is misconceived, as classification must be determined from the actual nature of the services rendered. 10.4. He stated that a penalty has been levied on the Appellant for suppressing the value of taxable services. He stated that the Appellant had failed to correctly assess and discharge the total tax liability. He stated that the Appellant failed to pay or short paid service tax on the services rendered because of willful misstatement and suppression of facts. He stated that therefore penalty was leviable under Section 77 and 78 of the Act of 1994. He stated that consequently, no interference is warranted with the Impugned Order 2, and the present appeal deserves to be dismissed. CASE ANALY....
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....on its conclusion that the demand for extended period of limitation had been set aside, agreed with the contentions of the Appellant and reduced the penalty amount from Rs. 65,75,890/- to Rs. 4,50,000/- vide Impugned Order 2. 18. In the present appeal, the Appellant is challenging the levy of penalty amount of Rs. 4,50,000/-, imposed under Section 78 of the Act of 1994 vide Impugned Order 2. 19. The Appellant has relied upon the contents of the communications dated 11.09.2006 and 20.11.2007 addressed by the Assistant Commissioner and Deputy Commissioner of Service Tax respectively to the Senior Audit Officer, CAP-IV, contending that the services rendered by the Appellant to the Government Institutions was non-commercial and thus, not exigible to service tax. It has contended that the non-payment of service tax by the Appellant was thus a bona fide interpretation of the nature of its services and that there was no suppression by the Appellant warranting imposition of penalty. 20. The Appellant has relied upon Section 80 of the Act of 1994, which reads as under: - "Section 80. Penalty not to be imposed in certain cases. (1) Notwithstanding anything containe....