In a recent ruling, the Ahmedabad bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that penalty under section 78 of the Finance Act, 1994 when Service Tax Demand was for a period within the limitation.
Deep Construction Company, the appellant challenged the demand of service tax and interest and imposition of penalty under Sections 76 & 77 of the Finance Act, 1994. The revenue filed an appealing revenue against the non-imposition of penalty under Section 78 of the Finance Act, 1994 and the dropping of demand to the extent of Rs. 48,26,850/-.
The demand has been confirmed by denying the benefit of notification no.1/2006-ST dated 01.03.2006 on the ground that the appellant has not included the value of free supply given by the service recipient.
As per the impugned order is if the appellant has adjusted the amount of Rs.1,43,72,143/- in the ST-3 returns on account of excess payment. Further pointed out that the Commissioner has rightly observed that during the period April-2008 to March-2008, the total duty paid by the appellant was Rs. 60 lacs and therefore, the figure of Rs.1,43,72,143/- mentioned in the show cause is not correct.
It was contended that the Commissioner has wrongly denied the adjustment of Rs. 10,46,184/- done during the period October- 2008 to March- 2010 on account of the monthly limit prescribed under Rule 6 of Service Tax Rules, 1994.
Further argued that penalty under Sections 76 & 77 has been wrongly imposed on the appellant as they had acted within the framework of law while availing credit of input service and availing the benefit of notification No. 32/2007-ST dated 22.05.2007.
If the service tax is evaded without any malafide intention then section 76 is applicable. The burden of proof is on the assessee that service tax is evaded without any malafide intention on his part.Section 78 is applicable if the service tax is evaded with any malafide intention then section, but if the assessee proves that there is no any malafide intention then section 76 is applicable.
The Commissioner in his order has held that the said amount is incorrect. It is seen that while coming to the said conclusion Annexure D to the show cause notice has not been fully examined.
It has been argued by the Commissioner that the periodical returns for the period 2008-09 and 200910 and therefore, the entire demand for the two years is within limitation. Since the demand is for a period within limitation, no penalty under Section 78 has been imposed by the Commissioner.
A Coram comprising of Mr Ramesh Nair, Member (Judicial) and Mr Raju, Member (Technical) held that merely because a penalty under Section 78 has been imposed for the earlier period, no penalty can be imposed for any subsequent period is a misplaced notion. While partly allowing the appeal, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority to pass a fresh adjudication.
Shri Abhishek Doshi, CA appeared for the Assessee and Shri G. Kirupanandan appeared for the Revenue.
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