Benefit of sec 80 of Finance Act be given when assessee has paid the service tax as soon as it was pointed by auditor

CESTAT: Benefit of section 80 of Finance Act be extended to the assessee when the assessee has paid the service tax as soon as it was pointed by the auditor

Sud Chemie Pvt. Ltd. vs CCE & S.T. Vadodra-I (CESTAT Ahmedabad); ST Appeal No. 10021 of 2019; 02.09.2021

The CESTAT, Ahmedabad bench dealt with two issues in this case.

First issue relates to the payment of service on the reverse charge basis on GTA services received by them. The demand pertains to the period April 2005- March 2006.The appellant has discharged the duty liability through their Cenvat credit on 1st December, 2006 along with interest. However, when the revenue pointed out that this amount should be paid in cash, the appellant discharge the duty in cash on 27th December, 2006. The appellant contended that they are entitled for the benefit of section 73(3) of the Finance Act, 1994. It was pointed out that the revenue has denied the benefit of the said section because section 73(3) was introduced in 2010 much after the disputed period.

It was observed and held by the Ld. Bench that the appellant has paid the service tax as soon as it was pointed by the auditor and again in cash when it was pointed out that it has to be paid in cash. In these circumstances, it was held that there was no malafide on the part of the appellant. Therefore, benefit of section 80 should be extended for the appellant and penalty under section 76 and 78 are set aside. The appellant have already conceded that they are not contesting the payment of duty.

Second issue pertained to the demand of service on reverse charge basis in respect of commission paid by the appellant to a foreign entity. The period of the second dispute is 16th June 2005 to March 2006. It was pointed out that the said period is prior to the introduction of section 66A. It was again pointed out that prior to the said period the levy itself was not leviable. It was argued that during that period there was lot of confusion in the trade regarding leviability of the said duty on reverse charge basis. It was also claimed that they are not demanding any refund of duty but only setting aside of penalties imposed under section 76 and 78. It was further claimed that their specific claim under section 80 was not considered.

It was observed and held by the Ld. Bench that the period was prior to introduction of 66A when the duty is not leviable. In this circumstance, it was held that there was no justification in imposition of penalty under section 76, 77 and 78. The penalty imposed under section 76, 77 and 78 are set aside.