2019 (1) TMI 566 – CESTAT MUMBAI – TMI – Penalty u/s 78 – short payment of service tax – appellant had gone to its notice during finalisation of the financial accounts for which it could not revise the same in their return – intent to evade – Held that:- Such short payment was mainly due to the fact that it had failed to furnish proof during assessment that it had fulfilled the criteria of “pure agent” as laid down under Rule 5 and failed to discharge service tax liability under reverse charge mechanism on payment made to the Directors – Show-cause also indicated that appellant had failed to charge and pay the service tax on the value received as pure agent and value of director service for which it had contravened the provision of Section 68 of the Finance Act. There is nothing available in the show-cause that such contravention of the Act or Rule was made with an intent to evade payment of service tax.
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In the instant case when the nature of service provide by the appellant be
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ledge, Explanation – 2 to Section 73(3) of the Finance Act is more applicable to the appellant.
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Penalty u/s 78 set aside – appeal allowed – decided in favor of appellant. – Appeal No. ST//86692/2018 – A/85025/2019 – Dated:- 8-1-2019 – Dr. Suvendu Kumar Pati, Member (Judicial) Shri Bipin Kumar Sinha, Consultant for the appellant Shri Dilip Shinde, AC (AR) for the respondent ORDER Confirmation of penalty of ₹ 41,04,525/- under section 78 of the Finance Act by the Commissioner (Appeals) of CGST & CX, Thane by upholding the OIO is assailed in this appeal. 2. Factual backdrop of the case is that the appellant is engaged in providing marketing and research agency services to various companies and has registered it under service tax. For the financial year 2013-14 and 2014-15, it filed ST3 return belatedly for the period from April to September 2013 on 04.04.2014 and for the period from October 2013 to March 2014 on 05.04.2014. Vide show-cause notice dated 28.09.2014 issued un
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s) s order confirming penalty under section 78 of the Finance Act is erroneous. In citing decision reported in Uniworth 2013 (288) ELT 161 (SC) along with other decisions included Larsen & Toubro reported in 2007 (211) ELT 513 (SC) the ld. Counsel for the appellant argued that no such allegation is made in the show-cause notice to attract penalty and therefore the entire penalty of ₹ 4104,525/- under section 78 of the Finance Act is unsustainable. He further pointed out that in all those cases, the cardinal principle of law set was the burden of proof to establish any malafide was on the department and there was no averment that duty of excise has been intentionally evaded or fraud or collusion has been practiced or there was any mis-statement or suppression of fact for which he prayed to set aside the order of the Commissioner (Appeals). 4. In response to such submissions, ld. AR for the department supported the reasoning and rationality of the order passed by the Commission
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her, such short payment was mainly due to the fact that it had failed to furnish proof during assessment that it had fulfilled the criteria of pure agent as laid down under Rule 5 and failed to discharge service tax liability under reverse charge mechanism on payment made to the Directors. Show-cause also indicated that appellant had failed to charge and pay the service tax on the value received as pure agent and value of director service for which it had contravened the provision of Section 68 of the Finance Act. There is nothing available in the show-cause that such contravention of the Act or Rule was made with an intent to evade payment of service tax. On the other hand, the show-cause notice indicates that appellant had failed to discharge the same and such use of word that appellant had failed to discharge the service tax is also found in the OIO and OIA. Further on close scrutiny of the order of Commissioner (Appeals), it is noticed that appellant had produced 14 plus 12 invoice
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search agency. Be that as it may, when appellant had not challenged the same those point needs no further discussion except for the purpose that availment of benefits as pure agent was asserted by the appellant and denied by the revenue authority in which case it cannot be said that such denial has attained finality and appellant had therefore contravened the provisions of the Act Rule as contemplated in Section 73(1) proviso. 5.1. Likewise in borrowing Section 194J of the Income Tax Act which made remuneration made to the director as taxable without distinction of the payment if made to the directors as salary or remuneration, the Commissioner had confirmed the invocation of notification no.30/2012-ST dated 20.06.2012 that was made effective from July 2012 and demanded tax liability under reverse charge mechanism. Therefore, it cannot be said that appellant had not followed the provisions contained in Chapter of Finance Act or in the Rule made thereunder since under erroneous interpre
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