Penalty not Leviable on Failure of Discharge oF Tax Liability under Bonafide Belief of Non Necessity of Payment: CESTAT [Read Order]
Even if payment is made through CENVAT for GTA services, which is impermissible, it cannot be stated that the assessee had misstated or suppressed any information or evaded tax in as much as the details of the payment were available in the return
![Penalty not Leviable on Failure of Discharge oF Tax Liability under Bonafide Belief of Non Necessity of Payment: CESTAT [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/03/Penalty-Penalty-Not-Leviable-on-Failure-Discharge-OF-Tax-Liability-Tax-Liability-Tax-Liability-Under-Bonafide-Belief-Non-Necessity-of-Payment-taxscan.jpg "Penalty not Leviable on Failure of Discharge oF Tax Liability under Bonafide Belief of Non Necessity of Payment: CESTAT [Read Order]")
The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that there is no penalty imposed if an assessee fails to pay his taxes because he honestly believes that the tax was not due. The assessee, Indure Private Limited, is involved in the production, acquisition, and installation of ash management machinery. Under Reverse Charge and...
The New Delhi Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has ruled that there is no penalty imposed if an assessee fails to pay his taxes because he honestly believes that the tax was not due.
The assessee, Indure Private Limited, is involved in the production, acquisition, and installation of ash management machinery. Under Reverse Charge and Works Contract Services, the assessee paid the service tax. According to the department's investigation, the assessee was unable to claim the abatement benefit because they were using CENVAT Credit for input services, which required them to pay service tax.
The demand was validated by the adjudicating authority. Disappointed with the Adjudicating Authority's ruling, the assessee appealed to the Commissioner, who upheld the Adjudicating Authority's judgment. Before the Tribunal, the assessee has contested the Commissioner's order. The assessee argued that the services they received could not be considered imports of services since they were not classified as business auxiliary services. Additionally, the assessee paid the head selling commission in convertible foreign currency.
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The assessee further argued that no portion of the service had been provided in India and that the entire service had been supplied outside of the country. As a result, the assessee was exempt from paying service tax. In contrast, the Department argued that the assessee had unquestionably compensated the aforementioned foreign entity for the services. Despite what they claim, these services fall under Business Auxiliary Services rather than Business Support Services.
The two member bench of Dr. Rachna Gupta (Judicial) and Ms. Hemambika R. Priya (Technical) has observed that even if payment is made through CENVAT for GTA services, which is impermissible, it cannot be stated that the assessee had misstated or suppressed any information or evaded tax in as much as the details of the payment were available in the return.
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The assessee further argued that no portion of the service had been provided in India and that the entire service had been supplied outside of the country. As a result, the assessee was exempt from paying service tax. In contrast, the Department argued that the assessee had unquestionably compensated the aforementioned foreign entity for the services. Despite what they claim, these services fall under Business Auxiliary Services rather than Business Support Services.
To Read the full text of the Order CLICK HERE
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