PRS Permacel Pvt. Ltd. Versus CCGST Thane Rural
Service Tax
2018 (12) TMI 262 – CESTAT MUMBAI – TMI
CESTAT MUMBAI – AT
Dated:- 30-11-2018
Appeal No. ST/85936, 85940, 85961/2018 – A/88035-88037/2018
Service Tax
Dr. Suvendu Kumar Pati, Member (Judicial)
Shri Subash Chaudhary, Manager for the appellant
Shri Vivek Diwedi, AC (AR) for the respondent
ORDER
Confirmation of penal liability under the Finance Act against non-payment of service tax under partial reverse charge mechanism has given rise to this appeal.
2. Fact of the case, in a nutshell, is that appellant is a manufacturer which had undergone EA Audit in March 2015 by the respondent department. It was noticed that for renting motor vehicle, availing of security service and availing of manpower service, appellant had failed to discharge service tax liability under the reverse charge mechanism introduced vide Notification 30/2012 and on being pointed out by the Audit team it had discharged the entire tax
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which show-cause should not have been issued to the appellant. He further submitted that vide their letter dated 09.02.2016 (Exhibit D) appellant had intimated the respondent department in response to show-cause notice that they had not received audit report and they required a month's time after receipt of the said audit report to prepare and submit their reply to the show-cause and vide Exhibit-F i.e. letter dated 16.05.2016 appellant also had intimated the adjudicating authority that they had not received the audit report and the officer dealing with the matter was on leave for which they wanted adjournment of the date for personal hearing to any future date after 20.07.2016 but without providing the appellant the opportunity of personal hearing, the adjudicating authority passed the order-in-original confirming the charges in the show-cause. He affirms that appellant was not liable to pay 15% of service tax along with tax and interest due on it as under reverse charge mechanism, t
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t period for which being a long time registered manufacturer it is to be treated as well-versed with the Rules and Regulations pertaining to Central Excise and Service Tax laws and it has failed to disclose the correct value of tax in ST-3 returns for which wilful suppression can easily be attributed to it. He also pointed out that principle of natural justice was not violated since there was nearly six months gap between issue of show-cause and the date fixed for personal hearing during which period appellant could have sought for documents like audit report from the department, as has been observed by the Commissioner (Appeals) in para 5 of his Order-in-Appeal and therefore interference by this Tribunal is uncalled for.
5. Heard from both sides at length and gone through the case records. It is noticed that in the Order-in-Appeal the ld. Commissioner (Appeals) has placed on record objections of the appellant which are also reiterated here by the ld. Manager for the appellant company
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0% tax component was realised by the service provider and deposited in the government to establish that there was occasion of revenue loss to the government.
6. Partial reverse charge mechanism has been introduced by way of Notification 30/2012 dated 20.06.2012. In the said Notification, w.e.f. 01.07.2012 in case of supply of manpower for any purpose or service in execution of work contract by an individual, HUF or partnership firm whether registered or not including association of persons are required to pay 25% of service tax and the service receiver is required to pay 75% of the said tax. Going by the backdrop of bringing such provision into the statute book, if various literatures are referred, it can be found that this Notification 30/12 has brought a new legislation of taxation to existing system of “reverse charge mechanism” by including “partial reverse charge mechanism” as a new system in respect of specified services provided for certain category of services fixing liability
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s of account are maintained by them, even though they are not aware about the various statutory liability cast on them and the same will remove the difficulty of the government in tracing out the service provider who are liable to pay service tax. But as commented by Ms. S. Sharma in her article on Reverse Charge Mechanism published in the Chamber Journal of December 2012 at page 95, this system would bring lot of confusion and uncertainty and among them the first would relate to identification of such vendors. In other words, whether the service provider is from an organised sector or unorganised sector, it would be difficult for the service recipient to trace out the same. Circular no. 30/12 is applicable to individual i.e. proprietorship firm, HUF, partnership firm and association of persons for whom this bifurcation of 75:25 or 50:50 is required to be made for the purpose of payment of service tax.
7. Now coming to the statutory audit procedure, the purpose of audit, as available
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ich covers central excise, service tax and customs laws during which time the assesses were examined by CERA audit party to point out the deficiencies, leakage of revenue and non recoveries of dues by the Central Excise Department. Therefore, it cannot be said that only because audit party had found non-observance of partial reverse charge mechanism procedure in respect of certain services, without any reference to the categorising of service provider, appellant is to be tested for suppression etc.
8. In the conclusion, I have got no hesitation to say that respondent has not brought forth any cogent evidence on record to establish the charge of wilful suppression by the appellant company to invoke extended period of service so as to justify penalty. Hence the order.
9. The appeal is allowed and the order passed by the Commissioner (Appeals) in Order-in-Appeal No. PK/159- 161/Appeal Thane/TR/17-18 dated 01.01.2018 is hereby set aside.
(Pronounced in Court on 30.11.2018)
Case laws
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