SECTION 80 OF THE FINANCE ACT, 1994 – PENALTY NOT TO BE IMPOSED IN CERTAIN CASES :

The Assessee was providing security services. It had paid certain amount towards Service Tax prior to issue of show cause notice but had not obtained registration and had not filed returns. After issue of SCN, it paid balance of service tax demand in instalments. However, on adjudication, adjudicating authority, imposed penalty. On appeal before the Commissioner (Appeal), the Commissioner (Appeal), on finding a sufficient cause, reduced penalty amount. The Tribunal also upheld said reduction. The Department had preferred the appeal before the High Court, challenging the orders passed by the Appellate Authority reducing the penalties imposed by the assessing authority.

The High Court dismissed the appeal. The High Court find “When two fact finding authorities have held the non-payment of service tax was not intentional, it was not with any intention to avoid tax, considered the circumstances in which the assessee was placed and reduced the penalty, it cannot be said that the said order suffers from any legal infirmity. No substantial question fo law arises for consideration in this appeal. The contention that once there is a default the payment of penalty is automatically unsustainable in view of the language employed in section 80 of the Act, where if a sufficient cause is made out for the default under any of these provisions, then no penalty shall be imposed. In that view of the matter, the order passed by the Tribunal do not suffer from any legal infirmity, which calls for interference. Therefore the substantial question of law is answered in favour of the assessee and against the Revenue.”.

Commissioner of Central Excise, Mangalore V. Nisa Industrial Service (P.) Ltd. – HIGH COURT OF KARNATAKA

NOTE :

In this case, the assessee was succeed in both the appeal i.e. before the Commissioner (Appeal) and Tribunal. The department had filed the appeal before the High Court on the ground that when two fact finding authorities had held that non payment of service tax was not intentional, considered circumstances in which assessee was placed and penalty was reduced, it could not be said that said order suffered from any legal infirmity. So one can rely upon the said decision in any matter while hearing before the authority.

SECTION 65(23) OF FINANCE OF ACT, 1994 – CARGO HANDLING SERVICE:

Movement of excavated iron within mining area from one place to another can not be called as “Cargo Handling Service”

To call an activity to be Cargo Handling Service, there should be an activity of movement of cargo from one place to another without any internal movement within the mining area. The Tribunal held that movement of the excavated iron within the mining area from one place to another that operation can not be called as Cargo Handling Service

Dilip Construction V. Commissioner of Central Excise, Raipur – CESTAT, NEW DELHI BENCH

SECTION 65(50b) of Finance Act, 1994 – Transportation of Goods by Road Services:

Assessee, Nirma Ltd., had received Goods Transport Service. Department had issued show cause notice to him on 31-12-1998 and demanding Service Tax. But after the decision of Hon’ble Supreme Court in case of Laghu Udyog Bharti V. Union of India [2006] 4 STT 322, where in demand of Service Tax from recipient of service was declared ultra virus, said proceeding was dropped. After Finance Act, 2000, there was a revolution in provision to demand service tax from recipient. So the department had issued again a show cause notice to assessee on 09-02-2004 demanding service tax. The Tribunal held that since at relevant point of time when recipient was not required to discharge tax liability for availing GTA Service, question of filing of return did not arise. Therefore Section 73 could not be invoked against assessee to demand Service Tax.

Nirma Ltd. V. Commissioner of Central Excise, Indore – CESTAT, NEW DELHI BENCH [2012] 35 STT 211/20

SECTION 80 r.w.s. 76, 77 & 78 OF FINANCE ACT, 1994:

Merely because revenue detected a case that does not ipso facto invite penal consequence unless ingredients of penalty in respect of each incidence of levy are brought to record.

Assessee was engaged in providing different types of services, when department sought information from him, he took registration and paid Service Tax amount. However, in adjudication, penalties were imposed. Commissioner (Appeal) though upheld other penalties, reduced penalty imposed u/s. 78. The Tribunal held that in absence of questionable conduct on the part of assessee, penalty was to be set aside.

Shobha Lal Solanki V. Commissioner of Central Excise, Jaipur-II – CESTAT, NEW DELHI BENCH.

RULE 2(I) – CENVAT CREDIT RULES, 2004 – CENVAT CREDIT – INPUT SERVICE:

Assessee availed construction service and works contract Service on construction of warehouse. It availed CENVAT credit of Service Tax paid on above services and utilized same for payment of Service Tax on renting of immovable property service. Adjudicating Authority denied said credit. Commissioner (Appeal) dismissed assessee’s appeal for failure to deposit 50 % of demand. Since warehouse itself was going to be rented out, prima facie, assessee was eligible for Cenvat Credit of Service Tax paid on input service utilized for building said property. Therefore, matter was to be remanded to Commissioner (Appeal) to decide appeal on merits without insisting on any pre-deposit on assessee.

Mahalaxmi Warehouse & Allied Industries V. Commissioner of Central Excise, Rajkot – CESTAT, AHMEDABAD BENCH.

RULE 9 OF CENVAT CREDIT RULES, 2004 : CENVAT CREDIT – DOCUMENTS AND ACCOUNTS:

Assessee took CENVAT credit on inputs on the basis of invoices. The Revenue denied the said credit on the grounds that invoices submitted by assessee were all endorsed invoices but while endorsing, consignee name was not mentioned in invoices. The Tribunal held that since name of consignee is not one of the essential requirements specified in proviso to rule 9(2), it is necessary to examine whether other conditions for allowing CENVAT credit had been fulfilled or not. 

Century Dyeing & Printing Mills V. Commissioner of Central Excise, Surat – CESTAT, AHMEDABAD BENCH