Wednesday, 10 December 2014

Penalty set aside - mass ignorance amongst service providers to include the value- bonafide conduct of the assessee.

H.M. Singh & Co. vs, Commissioner of Central Excise, Customs & Service Tax. [2014] 49 taxmano.com 417 (Allahabad)



 FACTS:
The assessee was engaged in providing taxable service of manpower recruitment and supply agency service. The assessee did not include provident fund payments received from service receiver in relation to manpower supplied to it, in the taxable value of services. The Department
issued notice of demand levying penalty u/s 77 and 78. The Assessee contended that he paid service tax including interest even before issue of adjudication order and the said amount was not included in the value of taxable servjpe under bonafide belief that service tax was not applicable on it. The attention of the Court was also drawn to the fact that on the common issue 200 notices were sent by the revenue thus evidencing mass unawareness among the service providers regarding the issue.

HELD:
The Hon'ble High Court noted that at the material time, the department also observed that there appeared a general ignorance among the service providers as to whether the service tax was attracted on the component of provident fund received from the recipient of the service to whom the manpower services were provided. The High Court also observed that, appellant did not retain any of the amounts out of employer's contribution to provident fund payments received from the service receiver towards the deputed employees, but deposited it in the account of the concerned employees maintained with the Provident Fund Commissioner. The High Court held that the conduct of the appellant in paying the entire amount of service tax dues together with interest even before the order of adjudication was passed is a factor which must weigh in the balance and hence there was no fraud, collusion, willful misstatement or suppression of FACTS or contravention with intent to evade the payment of tax in this case. Accordingly, the penalty was set aside

No comments:

Can GST Under RCM Not Charged and Paid from FY 2017-18 to October 2024 be Settled in FY 2024-25?

 In a recent and significant update to GST regulations, registered persons in India can now clear unpaid Reverse Charge Mechanism (RCM) liab...