CESTAT quashes Penalty Imposed u/s 78 of Finance Act for Short Payment of Service Tax on ground of Genuine Disclosure of Audited Balance Sheet [Read Order]

The Kolkata bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the penalty imposed under section 78 of the Finance Act,1994 for the short payment of the service tax on the ground of genuine disclosure of audited balance sheet. 

J.D.Marketing, the appellant assessee was engaged in providing ‘business auxiliary service’ to AIRCEL, by way of distributing SIM cards, and the assessee buys SIM cards at a discounted price and then sells the SIM cards to a lesser discounted price in the retail market thereby earning a profit through the difference of discounts. 

The assessee appealed against the order passed by the Commissioner for imposing a penalty for irregular availment of CENVAT credit and short payment of service tax. 

Kalyan Das, the counsel for the assessee contended that the assessee had been filing service tax returns regularly and paying service tax and the details of credit availed and utilized by the assessee had been disclosed in the service tax returns filed and the value of taxable services rendered by them had been disclosed in the Balance Sheets. 

Further submitted that all the details had been taken from their audited balance sheet, thus the suppression of fact to evade payment of duty cannot be alleged by the department. 

S. Mukhopadhyay, the counsel for the revenue relied on the decisions made by the lower authorities and contended that the assessee availed irregular CENVAT credit and the penalty imposed by the department was as per the law and liable to be sustained. 

The Bench observed that the department had not established any suppression on the part of the assessee and the penalty imposed by the department cannot sustain. 

A single-member bench comprising K.Anpazhakan (Technical) quashed the penalty imposed by the department while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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