No Penalty Leviable If Assessee Fails To Discharge Tax Liability Under Bonafide Belief That No Tax Needed To Be Paid: CESTAT

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that if an assessee fails to discharge his tax liability under the bonafide belief that tax did not need to be paid, no penalty is leviable. The Bench of Dr. Rachna Gupta (Judicial) and Ms. Hemambika R. Priya (Technical) has observed that, “even if payment is made through CENVAT for GTA services, which is impermissible, it cannot be stated that the assessee had misstated or suppressed any information or evaded tax in as much as the details of the payment were available in the return.” In this case, the assessee is engaged in the business of manufacturing, procurement and commissioning of ash handling equipment. The assessee discharged the Service Tax under Reverse Charge and Works Contract Services. During investigation, the department alleged that the assessee was not eligible to claim benefit of abatement as they are availing CENVAT Credit on input services, resulting in payment of service tax. The Adjudicating Authority confirmed the demand. Aggrieved by the decision of Adjudicating Authority, the assessee filed an Appeal before Commissioner, who upheld the order of the Adjudicating Authority. The assessee has challenged the order passed by the Commissioner before the Tribunal. The assessee contended that as the services received by the assessee are not classifiable under Business Auxiliary Services, the receipt of the same cannot be said to be import of services. Also, the assessee had made the payment in convertible foreign exchange under the head selling commission. It was further contended by the assessee that the service had been performed outside India, and no part of service had been rendered in India. Hence, the assessee was not liable to pay any service tax. Whereas it was contended by the Department that assessee had indisputably paid consideration to the said overseas company in lieu of said services. Such services come under Business Auxiliary Service and not under Business Support Service as claimed by them. The Tribunal noted that the services provided by a commission agent are included in the category of taxable service termed as "business auxiliary service", where 'service' is provided by a service provider who is based outside India to a service recipient who is based in India. Thus, assessee as recipient of taxable service from offshore service providers are liable to pay the service tax. “If an Assessee fails to discharge tax liability under the Bonafide belief that no tax need be paid due to Revenue neutrality, then as the judgement stated that as the issue involved in this case was purely of interpretation, no penalty is leviable on the Assessee” added the Tribunal. In view of the above, the Tribunal allowed the appeal partially. Counsel for Respondent/ Assessee: A.K. Batra Counsel for Appellant/ Department: Rakesh Kumar Case Title: M/s The Indure Private Limited v. The Commissioner of Service Tax Case Number: Service Tax Appeal No. 51192 Of 2017 Click Here To Read/Download The Order

No Penalty Leviable If Assessee Fails To Discharge Tax Liability Under Bonafide Belief That No Tax Needed To Be Paid: CESTAT

Mehak Dhiman

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