No penalty if there is mass unawareness about taxability of certain service
We are sharing with you an important judgment of the Hon'ble Allahabad High Court in the case of H.M. Singh & Co. Vs. Commissioner of Central Excise, Customs & Service Tax [2014 (49) taxmann.com 417(Allahabad)] on the following issue:
Issue:
Whether penalty could be levied under Section 77 and 78 of the Finance Act, 1994 (the Finance Act) despite the fact that the entire tax liability as well as interest was deposited before passing of adjudicating order and there was mass unawareness about taxability of impugned service?
Facts and background:
H.M. Singh & Co. ("the Appellant") was served a Show Cause Notice dated September 29, 2010 by the Department demanding Service tax on the ground that during the period from April 2005 to March 2010, the Appellant had received Provident Funds payments relating to manpower supplied by it to the Hindalco Industries Limited, Renukoot ("Service recipient") and had not included the same in the assessable value for the purpose of calculation of Service tax.
The Appellant made payment of Service tax along with interest during June 2011 to October 2011. Thereafter, the Department passed an adjudicating order dated November 24, 2011 and levied penalty under Sections 77 and 78 of the Finance Act (with option to pay 25% penalty within 30 days) which was further upheld by the Ld. Commissioner (Appeals) and the Hon'ble Tribunal.
Being aggrieved, the Appellant preferred an appeal before the Hon'ble High Court of Allahabad contesting the amount of penalty on the following grounds:
- There was no case of fraud, collusion, wilful misstatement or suppression of facts within the meaning of Section 78 of the Finance Act or of a contravention with intent to evade payment of Service tax.
- The Appellant's bona fide intentions are well established from the fact that the alleged amount of Service tax with interest was deposited without waiting for an order of adjudication.
- Nearly two-hundred notices had been issued by the division and Commissionerates at Allahabad on same issue which indicates that there was mass unawareness among the service providers in the stated area which was also noted in an order of the Joint Commissioner (Adjudication), Central Excise, Allahabad dated June 16, 2011.
Held:
The Hon'ble High Court of Allahabad relied upon following judgments:
- Anand Nishikawa Co. Ltd. Vs. CCE [(2005) 2 STT 226 (SC)];
- Padmini Products Vs. Collector of Central Excise [1989 taxmann.com 629 (SC)]
and held that the Appellant's conduct in paying Service tax even prior to adjudication was relevant factor depicting bona fide intentions of the Appellant.
Further, since there was mass unawareness on the issue involved, as even noted by Department itself, there was no case of fraud, collusion, willful misstatement or suppression of facts within the meaning of Section 78 of the Finance Act or of a contravention with intent to evade payment of Service tax. Hence, penalty could not be levied.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: bimaljain@hotmail.com)
DIN-3 replaced by DIR-3C – ICSI Posted In Company Law | News | No Comments » <!-- google_ad_client = "ca-pub-4758308089404121"; /* 336x280, Tax Guru created 1/1/09 */ google_ad_slot = "2487820938"; google_ad_width = 336; google_ad_height = 280; google_ad_region="test"; //-->This is to inform that the e-form DIR-3C, i.e., replacing e-form DIN-3 has been introduced by MCA for filing. This form is for intimating DIN of Directors to ROCs. Some of the companies were facing issues in filing of the forms due to non-availability of signatory details of the Directors in MCA portal. In this regard, Companies which do not have any of their Directors/Signatory details registered in the MCA2 1 system and who are desirous of filing DIR-3C Form are advised to get atleast one authorised signatory registered by contacting the concerned Registrar of Companies. ROCs have been requested by the MCA to allow entry of details from their offices also. Further, CLSS-2014 Scheme is available to corporates for filing of their overdue documents and companies desirous of availing benefit of the scheme may update their directors details (by using e-form DIR-3C) to enable themselves to file their Balance Sheets, Annual Returns and other annual documents on MCA portal. Since the Company Law Settlement Scheme, 2014 is ending on 15th October, 2014, professionals are requested to file e-form DIR- 3C for updating directors details of the companies and thereafter file the overdue documents as part of CLSS Scheme at the earliest convenience to avoid last minute rush and system congestion on the MCA2 1 portal. - See more at: DIN-3 replaced by DIR-3C - ICSI
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One Year Imprisonment to Then Superintendent of Bangalore Customs in Bribery case Posted In Custom Duty | News | 1 Comment » <!-- google_ad_client = "ca-pub-4758308089404121"; /* 336x280, Tax Guru created 1/1/09 */ google_ad_slot = "2487820938"; google_ad_width = 336; google_ad_height = 280; google_ad_region="test"; //-->In another case, the Additional City Civil & Sessions and Principal Special Judge for CBI Cases, Bangalore has convicted Shri B.A.Lakshman Kumar, then Superintendent, Postal Appraisal Department, Bangalore Customs, and sentenced him to undergo one year Simple Imprisonment with fine of Rs.3000/- in a bribery case. The CBI had filed a charge sheet after completion of investigation against Shri B.A.Lakshman Kumar U/s 7 and 13(2) r/w 13(1) (d) of the Prevention of Corruption Act, 1988. It was alleged that a parcel containing tennis rackets/squash rackets was sent to the Complainant at Bangalore from Avanglon Province of Chine by his relatives. The accused who was working as Superintendent, Postal Appraisal Department, Bangalore Customs, Bangalore, informed the complainant that the invoice/bill related to the said parcel was not traced and hence, had sought time for the delivery of the parcel. On 15.10.2008, the accused called the complainant that the invoice/bills corresponding to parcel have been traced and demanded a bribe of Rs.3000/- for delivery of parcel. CBI laid a trap and the accused was caught red handed while demanding & accepting bribe of Rs.3000/- from the complainant. The Trial Court found the accused persons guilty and convicted them. Source- CBI Press Release dated 09.10.2014 - See more at: One Year Imprisonment to Then Superintendent of Bangalore Customs in Bribery case
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