2019 (2) TMI 23 – CESTAT CHENNAI – TMI – Penalty u/s 76 and 77 of FA – non-discharge of service tax liability in spite of having collected the same from the service recipient – huge cash flow problem – immediate payment of tax with interest paid on being pointed out by audit team – ST-returns for half year ending 30.09.2009 on 27.08.2010. However, ST-3 returns for half year ending 31.03.2010 had not been filed – no intent to evade present – Held that:- The identical dispute involving non-discharge of service tax liability in spite of having collected the same from the service recipient had been addressed by CESTAT Chennai in the case of Jeyam Automotive Vs CCE Coimbatore [2018 (11) TMI 1150 – CESTAT CHENNAI] wherein it was held when reasonable cause for the failure to discharge service tax liability was available, and especially there is no evidence to show that that the delay / default was due to any wilful act to evade payment of duty, it is a fit case for invocation of Section 80 o
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harged service tax liability amounting to ₹ 77,94,334/- for the period from April 2009 and March 2010, although they realized taxable value as well as service tax from their clients. After being pointed out by audit, it appeared that appellants paid part of the arrears and filed the ST-returns for half year ending 30.09.2009 on 27.08.2010. However, ST-3 returns for half year ending 31.03.2010 had not been filed by them. Accordingly, SCN dt. 11.10.2010 was issued to the appellants inter alia, demanding the said amount with interest thereon and also proposing imposition of penalties under various provisions of law. In adjudication, the Commissioner vide impugned order held that appellant was liable for discharge of service tax under Manpower Recruitment or Supply Agency Service on the gross amount charged by them; that they are liable for imposition of penalty. The adjudicating authority confirmed the said amount of ₹ 77,94,334/- with interest appropriated the like amount pai
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te loans and paid Service Tax of ₹ 56,96,352/- and Interest of ₹ 5,23,793/-. The Appellant was issued with a Show Cause Notice invoking Penalty under Section 76. Balance amount of ₹ 20,97,982/- towards Service Tax and ₹ 1,61,469/- towards Interest was paid after issue of Show Cause Notice. The Appellant paid the entire Service Tax of ₹ 77,94,334/- along with interest of ₹ 6,85,262/- by arranging funds from outside on a very high interest. iii) The payment of the dues by the appellant shown his intention that they want to buy peace. Hence the penalty imposed under Section 76 of the Finance Act, 1994 is not sustainable in law. iv) In any case the appellant has been paying Service Tax on billing basis and the amounts collected from the Appellant s customers was not being used for furtherance of business and this resulted in belated payment of tax in the disputed period. Hence the appellant prays that imposition of penalty under Section 76 is not proper
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t pay tax within the due dates but also withheld the above information by not disclosing to the department in the ST-3 returns. Hence for these reason, there is no ground to interfere with the imposition of penalty. 4. Heard both sides and have gone through the facts. 5.1 We find that the identical dispute involving non-discharge of service tax liability in spite of having collected the same from the service recipient had been addressed by CESTAT Chennai in the case of Jeyam Automotive Vs CCE Coimbatore vide Final Order No.42481-42482/2018 dt. 18.09.2018 wherein it was held when reasonable cause for the failure to discharge service tax liability was available, and especially there is no evidence to show that that the delay / default was due to any wilful act to evade payment of duty, it is a fit case for invocation of Section 80 of the Act. The relevant portions of the aforesaid decision are reproduced below : 7.2 It can be seen from the contentions put forward as well as the records t
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e assessee was undergoing much financial hardship. The Hon ble High Court held that the penalties imposed under Section 77 and 78 ibid., set aside by the Tribunal invoking Section 80, was correct and proper. The relevant portion of the judgment is reproduced as under : 28. Though Mr. A. P. Srinivas, learned counsel appearing for Customs, Central Excise and Service Tax, reiterated the grounds of challenge, we are not inclined to accept the same for the reason that both the adjudicating authority viz., the Commissioner of Customs, Central Excise, and Service Tax, Coimbatore, as well as the final fact finding appellate authority, CESTAT, Madras, have categorically held that the assessee / respondent has discharged a portion of the interest liability prior to the issuance of the Show Cause Notice. 29. Perusal of the material on record discloses that the interest payable on the belated payment of service tax was ₹ 12,63,324/- and that even prior to the issuance of the Show Cause Notic
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crisis due to criminal breach of trust committed by their sub-agent and thereafter, paid the service tax voluntarily, the penalties imposed have been rightly set aside invoking Section 80. The Tribunal in the case of M/s. Dusters Total Solutions Services Pvt. Ltd. Vs. C.S.T., Chennai vide Final Order No. 41943/2018 dated 28.06.2018 had analysed the invocation of Section 80 to set aside the penalty imposed under Section 76, 77 and 78 of the Act, ibid. The appellant having paid entire demand of service tax along with interest, the prayer for setting aside the penalties, in our view, merits consideration, especially when there is no evidence to show that the delay/default was due to any wilful act to evade payment of duty. 8. From the above discussions and following the ratio laid down in the above case laws, we are of the opinion that this is a fit case to invoke Section 80 since the appellant has put forward reasonable cause for the failure to discharge the service tax liability. We th
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acts with intention to evade payment of service tax. On perusal of the documents such as the list of sundry debtors etc., it is seen that there was huge amount pending as receivables. So also they had to meet expenses for salary, accident compensation of employees provided under manpower supply service. The department does not have a case that any of the transactions were unaccounted or that they had been indulging in a parallel accounting. It is commonly understood that the employees supplied through manpower supply service have to be given the salaries within due time. If the service receivers delay the payment, it would cause much hardship to the service provider as they have to make the statutory payments such EPF, ESI etc. to the Government. Therefore, we find that the appellant has put forward reasonable cause for not paying the service tax within due time and is a fit case for invoking Section 80 of the Finance Act for setting aside the penalties. We hold that the impugned order
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