2019 (1) TMI 70 – CESTAT MUMBAI – TMI – Liability of service tax – washing and ironing services (Dhulai/Estri) – imposition of penalty under Section 77(2) and under Section 78 of the Finance Act, 1994 – Held that:- The Commissioner (Appeals) has given his finding that washing of clothes were done in washing machine with the help of water and washing powder/ liquid for which he held that service given by appellant before 01.07.2012 is not taxable but as negative list under Section 66D or mega exemption Notification no. 25/2012-ST have not contained the name of services provided by the appellant, the further period post negative list is taxable – there are no irregularity in his order on duty liability of the appellant applicable with effect from 01.07.2012, having regard to extension of cum tax benefit as provided under section 67(2) of the Act.
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Penalties under Section 77(2) – Held that:- While reducing penalty from ₹ 20,000 to ₹ 10,000 under Section 77(2) of the Act,
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rth Textile [2013 (1) TMI 616 – SUPREME COURT] that mere non-payment of duty is not equivalent to collusion or wilful mis-statement or suppression of fact is relevant – in the instant case as there was no proof furnished by the department that suppression had taken place and finding in the order-in-original reveals that appellant had started voluntarily paying the service tax, penalty of equivalent amount under Section 78 of the Act would be a travesty of justice.
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Service tax liability to be requantified with effect from 01.07.2012 by giving cum-tax benefit in terms of Section 67(2) of the Act – Applicable interest to be levied on requantified service tax liability penalty of ₹ 10000/- in terms of Section 77(2) of the Act is confirmed – Penalty under Section 78 of the Act is set aside – appeal allowed in part. – Appeal No. ST/85581/2018 – A/88192/2018 – Dated:- 31-12-2018 – Dr. Suvendu Kumar Pati, Member (Judicial) Shri J.N. Somaiya, Advocate for the appellant Shri Dilip Sh
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-in-original against which appellant preferred appeal before the Commissioner (Appeals), Pune who vide his order dated 01.11.2017, waived off duty liability up to implementation of negative list holding that only dried cleaning was taxable in the pre-amended period. He confirmed the duty liability for the period after 01.07.2012, reduced the penalty imposed under Section 77(2) to 10,000/- from 20,000 and directed for requantification of the duty liability, interest as well as proportionate penalty under Section 78. The said order is being challenged in this appeal. 3. In his memo of appeal and during course of hearing of the appeal the ld. Counsel for the appellant Shri J.N. Somaiya submitted that appellant is a cooperative society of rural ladies who were ignorant of the applicability of new service tax Rules post negative list regime and since the entire transactions were reflected in the books of Account, basing on which duty demand is made, there was no suppression of fact and unde
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mand is not sustainable for the entire period. 4. In response to such submissions, ld. AR for the department Shri Dilip Shinde reiterates the reasoning and rationality of the order passed by the Commissioner (Appeals) and in citing case laws reported in 2016 (41) STR 651 (Tri-Del), 2012 (27) STR 242 (Tri-Mumbai),2014 (34) STR 252 (Tri-Ahmd.), 2017 (52) STR 40 (Tri-Del), he argued that penalty imposed for non-payment of service tax by invoking extended period and under Section 78 is proper and justified for which interference by the Tribunal is uncalled for. 5. Heard from both sides at length and perused the case records as well as the case laws cited and relied upon by the adversaries. Admittedly appellant is a unit constituted under Cooperative Society Act and as its name indicates the members of the society are ladies but it has acquired the status of a limited company registered under the Service Tax way back in 2005 and was engaged in providing Business Auxiliary Service and transp
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ovided by the appellant, the further period post negative list is taxable. I find no irregularity in his order on duty liability of the appellant applicable with effect from 01.07.2012, having regard to extension of cum tax benefit as provided under section 67(2) of the Act. 6. Penalty was imposed under Section 77(2) and under Section 78 of the Finance Act, 1994 by the Commissioner (Appeals). But while reducing penalty from ₹ 20,000 to ₹ 10,000 under Section 77(2) of the Act, the Commissioner (Appeals) has given his reasoning that ₹ 20,000 was maximum penalty prescribed and as appellant was yet to file the prescribed return for which he considered that it would be improper to invoke Rule 7C and Section 70 of the Act to impose maximum penalty by equating the delay in filing with non-filing of return. Since respondent department has not challenged the same reduction of penalty, such reduction of penalty under Section 77(2) appears to be reasonable. 7. Now coming to the
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e for justifying penalty intended to be imposed under Section 78 of the Act. In the instant case the service provided by the appellant was not taxable before introduction of negative list. It was not filing returns on those scores though it was duly maintaining the record. Further if the contention of ld. Advocate is to be accepted, the rural folk of Indian society continue to follow the same procedure unless being appraised about change of any system, law, rule or regulation and to this extent, the observation of Hon'ble Supreme Court made in Uniworth Textile cited supra that mere non-payment of duty is not equivalent to collusion or wilful mis-statement or suppression of fact is relevant. It was further noted by the Hon'ble apex court that if the same were to be true then what would amount to ordinary default? Ultimately it was held that a specific or more serious niche is to be shown to construe the act of the appellant is fit for the applicability of proviso to Section 73(1
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