ST - Condition for invocation of extended period as provided u/s 73 and condition precedent for imposing penalty u/s 78 are identical - Once Commissioner (A) has come to finding for non-imposition of penalty by invoking s 80 then same cause is also to be factored in to conclude that extended period cannot be invoked: HC
By TIOL News Service
MUMBAI, NOV 18, 2013: AN appeal was filed by the Sugar factory before the High Court against the order dated 14 May 2013 of the CESTAT directing the appellant to deposit the entire amount of service tax of Rs.10,04,928/- for the purpose of hearing the appellant's appeal on merits.
During the pendency of the appeal, the Tribunal on 3 July 2013, dismissed the appellant's appeal on account of non-deposit of service taxeven though a short adjournment was sought from the Tribunal on the ground that their appeal had come up for hearing before the High Court on 2 July 2013 and it had been posted for hearing on 3 July 2013.
When these facts were pointed out to the High Court, liberty was granted to the appellant to amend its appeal memo and also challenge the order of the Tribunal dated 3 July 2013 dismissing the appellant's appeal.
It was accordingly done and on the date of hearing, the appeal was taken up for final disposal.
At the outset the High Court set aside the order dated 3 July 2013 of the Tribunal.
On the question of sustainability of the order of pre-deposit, the High Court noted that the facts were as under –
+ The appellant had received service of a Goods Transport Agency (GTA)during period 1 April 2005 to 31 October 2006 and liability to pay ST was cast on them. A SCN was issued on 14 October 2010 demanding ST of Rs.10,04,928/- and proposing imposition of penalties& interest.
+ The Additional Commissionerconfirmed the demand of service tax invoking the extended period of limitation and also imposed equivalent penalty of Rs.10,04,928/- under Section 78 of the said Act.
+ In appeal, the Commissioner (Appeals) upheld the service tax confirmed but he deleted the penalty under Section 78 by holding that the case of the appellant is squarely covered under the provisions of section 80 of the FA and no penalty needs to be imposed.
As mentioned, against the order of confirmation of the ST demand the appellant had filed an appeal before the CESTAT and the further proceedings are as mentioned at the outset. It also needs to be noted that no appeal was preferred by the revenue from the order dated 17 October 2012 of the Commissioner (Appeals) deleting the penalty imposed under Section 78 of the Act.
After extracting the above facts, the High Court observed -
+ The condition for invocation of the extended period of limitation as provided under Section 73 of the Act and the condition precedent for imposing penalty under Section 78 of the Act are identical viz: there should be either, fraud, collusion or willful misstatement or suppression of facts or contravention with intent to evade payment of service tax.
+ Once the Commissioner (Appeals) has come to a finding that for the relevant period, there was genuine cause for confusion regarding the correct legal position and also scope for doubt about the service tax liability on GTA as the 'Commercial concern' for non-imposition of penalty then the same cause is also to be factored in to conclude that extended period of limitation cannot be invoked even if the finding that there was sufficient cause for nonpayment of service tax was rendered in the context of Section 80 of the Act (as it stood at the relevant time). This finding will also apply to determine whether there was any intent to evade payment of service tax.
+ Moreover, the revenue has accepted the deletion of penalty as we are informed that the revenue has not preferred any appeal from the order dated 17 October 2012 of the Commissioner (Appeals) deleting the penalty.
+ The appellant points out that the services were provided by individual Truck owners who are not covered by the definition of GTA as existing during the relevant period as they are not commercial concern. K.M.B. Granites Pvt. Ltd. v/s. Commissioner of Central Excise, Salem (2010-TIOL-611-CESTAT-MAD), Salem Cooperative Sugar Mills (2009-TIOL-1677-CESTAT-MAD) and Lakshminarayana Mining Co. (2010-TIOL-122-CESTAT-BANG) cited and revenue has not been able to dispute the above position.
In fine, the High Court observed that it is of a prima facie view that the appellant's appeal against order dated 17 October 2010 should be heard on merits by the Tribunal without requiring any pre-deposit of service tax.
Accordingly, the order dated 3 July 2013 dismissing the appeal and the order dated 14 May 2013 of the Tribunal directing pre-deposit of Rs.10,04,928/- were set aside and the appeal was disposed of in the above terms.
(See 2013-TIOL-898-HC-MUM-ST)
