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CCGST Belapur Vs. Reliance Infocomm Infrastructure Ltd. - (Customs, Excise and Service Tax Appellate Tribunal) (25 Jan 2019)

Penalty can only be invoked, when there is failure to furnish return in prescribed form and not that return has been incorrectly filed


Service Tax

In instant case, order passed by the Commissioner of CGST & CE, (Appeals), setting aside the penalty imposed by the adjudicating authority on the Respondent under Section 77 and 78 of the Finance Act, 1994 read with 15(3) of Cenvat Credit Rules is assailed by the Appellant department before this forum.

The grounds on which Commissioner (Appeals) had set aside the order of the first appellate authority are mainly two. First, for differential short payment of service tax, no show-cause notice was issued as appellant had already paid the said tax along with interest; Second, Appellant was not issued with show-cause under section 73(1) of the Finance Act for which it has to be presumed that department has accepted the liability under section 73(3) of Act.

The adjudicating authority has not indicated the manner in which suppression of fact or misstatement has been established against the Appellant except that he pointed out that short payment was noticed while making reconciliation with ST-3 return. However, considering the fact that on such short payment, no show-cause notice was issued, the same cannot be recorded as suppression with malafide intention to evade payment of tax because no opportunity was provided to the appellant to justify such mismatching.

On being pointed out on such difference of amount which was shown less in the ST-3 return, the appellant had accepted the objection and discharged the service tax liability. In respect of wrong availment of cenvat credit, no finding is given in the Order in Original or Order in appeal that those credits were in fact inadmissible and not supported by the Rule except that respondent had accepted the fact of such availment of such credit as inadmissible.

Though admissibility or inadmissibility of the credit in respect of renting of immovable property and business support service is a mixed question of fact and law, the same requires no discussion in view of admission by the Respondent except to the extent that there is a difference between compliance of audit report and discharge of duty liability in respect of imposition of tax as per Section 265 of the Constitution of India.

In respect of penalty imposed under Section 77 by the adjudicating authority, the Commissioner (Appeals) clearly referred in his order that Section 70 can only be invoked when there is failure to furnish return in prescribed form and not that return has been incorrectly filed. A reading of Section 70 of the Finance Act would take any prudent man to conclude that such a finding made by the Commissioner (Appeals) is not erroneous and therefore his order setting aside penalty under Section 77 of the Finance Act needs no interference. The appeal is dismissed and the order passed by the Commissioner (Appeals) is confirmed.


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