Grace Enterprises vs Commissioner Of Service Tax, Mumbai-Ii

(Arising out of Order-in-Appeal No. RBT/175/2011 dated 25-04-2011 passed by Commissioner of Service Tax, Mumbai)

For approval and signature:

Honble Mr. M.V. Ravindran, Member (Judicial) and Honble Mr. C.J. Mathew, Member (Technical)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

====================================================== Grace Enterprises Appellant Vs. Commissioner of Service Tax, Mumbai-II Respondent

Appearance: Shri Prasad Paranjape, Advocate for Appellant Mrs P.V. Sekhar, Deputy Commissioner (AR), for Respondent

CORAM: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical)

Date of Hearing : 28/08/2015 Date of Decision : 28/08/2015

ORDER NO

Per: M.V. Ravindran

This appeal is directed against Order-in-Appeal No. RBT/175/2011 dated 25-04-2011.

2. Heard both sides and perused the records.

3. On perusal of records, it transpires that appellant was issued a show cause notice for demand of service tax of Rs. 2,66,053/- under the category of supply of labor/manpower during the period April 2005 to August, 2007, interest thereof and also proposing to impose penalties under section 76, 77, 78 of the Finance Act, 1994. The adjudicating authority confirmed the said demand but dropped the proposal for penalty sought to be imposed under section 77. The appellant discharged the entire amount of service tax, interest thereof on 22/02/2010 and contested the appeal before the first appellate authority. The first appellate authority after going through the entire records found that the appellant had not properly shown in ST3 returns the amounts billed for the service charges, held that there was suppression of facts, hence extended period was correctly invoked for confirmation of the demand of tax Before us, learned counsel submits that the having deposited the tax liability and the interest thereof, penalties to be set aside.

4. We find strong force in the contentions raised by the learned counsel in as much that there could be a bona-fide impression on the part of appellant, as to that they are required to pay service tax only in respect of the service charges which are collected by them from the sugar factory, as they have collected an amount on salaries and paid the same to laborers were actual. In our view, this bona-fide impression could have been carried by the appellant and accordingly, we hold that the appellant had made out a case of invoking the provisions of section 80 of the Finance Act 1994. Accordingly, in view of the facts and circumstances the case in hand we set aside all penalties imposed by invoking the provisions of section 80 of the Finance Act 1994 and allow the appeal to that extent.

5. In sum, service tax liability and interest thereof is up held and the penalties confirmed and upheld by the first appellate authority are set aside. Appeal is disposed of as indicated herein above.

(Pronounced in Court)

(C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial)

akp 1 3 APPEAL No.ST/499/11-Mum