Custom, Excise & Service Tax Tribunal
Nuclear Power Corporation Of India vs Commissioner Ce &Amp St (Ltu) Mumbai on 8 June, 2020
CUSTOMS, EXCISE & SERVICE TAX APPELLATE
TRIBUNAL, MUMBAI
REGIONAL BENCH
Service Tax Appeal No. 86685 of 2015
(Arising out of Order-in-Original No. 6/PR.COMMR(WLH)LTU-M/S.TAX/2015
dated 21.05.2015 passed by Principal Commissioner of Central Excise &
Service Tax, LTU, Mumbai)
M/s. Nuclear Power Corporation of Appellant
India Ltd.
8th floor, Vikram Sarabhai Bhavan,
Central Avenue, Anushakti Nagar,
Mumbai 400 094.
Vs.
Commissioner of Cen. Exc. & ST (LTU) Respondent
Mumbai 29th floor, Centre-I, World Trade Centre, Cuffe Parade, Mumbai 400 005.
Appearance:
Shri S.S. Gupta, C.A., for the Appellant Shri Kishori Lal, Principal Commissioner, Authorised Representative for the Respondent CORAM:
HON'BLE MR. S.K. MOHANTY, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO. A/85599/2020 Date of Hearing: 07.01.2020 Date of Decision: 08.06.2020 PER: SANJIV SRIVASTAVA This appeal is directed against the order in original No 6/PR.COMMR(WLH)LTU-M/S.TAX/2015 dated 21.05.2015 passed by Principal Commissioner of Central Excise & Service Tax, LTU, Mumbai. By the impugned order Commissioner has held as follows:
"ORDER 5.01 The demand of Service Tax amounting to Rs.18,11,23,250 (Rupees Eighteen crores Eleven Lakhs Twenty-three thousand 2 two hundred and fifty only) is hereby confirmed against M/s.
NPCIL for the period 01.04.2008 to 31.05.2013 as discussed above under Section 73(1) of the Finance Act, 1994.
5.02 The amount of Rs.8,59,63,482/- (Rupees Eight crores Fifty nine Lakhs sixty-three thousand four hundred and eighty two only) paid by M/s. NPCIL against the confirmed demand at Sr.No.5.01 above stands appropriated.
5.03 Interest at appropriate rate on the amount confirmed as above at 5.01 under the provisions of section 75 of the Chapter V of the Finance Act, 1994 from the date the amount of service tax was payable till the date it is paid is hereby ordered for recovery.
5.04 The amount of Rs.1,15,19,550/- (Rupees One crore Fifteen Lakhs nineteen thousand five hundred and fifty only) paid by M/s. NPCIL on account of interest against the interest due on the confirmed amount of demand stands appropriated.
5.05 A penalty of Rs.18,11,23,250/- (Rupees Eighteen crores Eleven Lakhs Twenty-three thousand two hundred and fifty only) i.e. equal to the amount of service tax short paid by NPCIL, under section 78 ibid is hereby imposed. Having imposed penalty under section 78/FA, 1994, imposition of penalty under section 76 ibid is refrained.
5.06 I impose a penalty for Rs.10,000/- (Rupees Ten thousand only) under Section 77 of the Chapter V of the Finance Act, 1994 for the contravention of the provisions of section 69 and section 70 of the Finance Act, 1994 for failure to take registration within specified timeline and for not having properly self assessed their service tax liabilities in respect of the above said services.
5.07 This order is issued without prejudice to any other action that may be initiated against the noticee under the provisions of the Finance Act, 1994 or rules framed thereunder or any other law for the time being in force in India."
32.1 Appellant had received certain document, design and engineering drawings in respect of the various projects being implemented by them. They had entered into a service agreement with their overseas service provider to prepare technical specifications, drawing and designs in respect of the projects being implemented by them.
2.2 When these specifications, design and engineering drawing were received by the appellant they discharged the custom duty on these by classifying them as documents under Chapter 49 of Customs Tariff Act, 1975 and paid the Custom Duty on the value inclusive of the charges paid by them towards the services received by them towards these specifications, design and engineering drawings.
2.3. During the course of audit undertaken it was observed that the services received by the appellant were liable to service tax under the category of Consulting Engineer Services as defined by Section 65(105)(g) of the Finance Act, 1994. Since the service provider was located outside India and was not having any permanent establishment or office in India, appellants as service receiver were required to discharge the service tax liability in respect of the services so received by them as provided by Section 67 of the Finance Act , 1994.
2.4 After audit enquiries conducted, a Show Cause Notice dated 22.10.2013 was issued to the appellants asking them to show cause as to why:
42.5 The show cause notice was adjudicated by the Commissioner as per the impugned order. Aggrieved by the impugned order Appellants have filed this appeal.5
3.1 We have heard Shri S S Gupta, Chartered Accountant for the Appellant and Shri Kishori Lal, Principal Commissioner, Authorized Representative for the revenue.
3.2 Arguing for the appellants learned Chartered Accountant submitted that-
➢ Hon'ble Supreme Court has in case of Associated Cement Company Ltd [2001 (128) E.L.T. 21 (S.C.)] held that drawing and designs all of tangible movable articles are goods liable for charge of customs duty under Section 12 read with Section 2(22)(e) of the Customs Act, 1962. Following the said decision they have at the time of clearance of the same at time of importation paid the Custom Duty due on them.
➢ Since they have discharged the Customs Duty on these drawings and designs, in view of the Hon'ble Apex Court decision, by treating them as goods, revenue cannot ask them to pay Service Tax by treating these as services irrespective of the nature of contract between them and their overseas supplier.
➢ In case the service tax is paid by them on a reverse charge basis the same will be admissible to them as CENVAT Credit and hence the situation is totally revenue neutral. ➢ All the facts were in the knowledge of the department as they had declared the same at time of payment of Customs Duty, and the fact that the matter is revenue neutral extended period of limitation as per proviso to sub- section (1) of Section 73 cannot be invoked for demanding the Service Tax.
➢ There is no case for imposition of penalty.
3.3 Arguing contra, learned Authorized Representative while reiterating the findings recorded in the impugned order submitted that-
➢ It is quite evident from the contracts entered between the appellant and overseas providers that the contracts are for 6 the provision of services and not the goods. Since the contracting parties themselves term the agreement to be the one for supply of services, they cannot have any contrary stand in these proceedings.
➢ It is not in dispute that the services received by the appellants from their overseas supplier are classifiable under the category of Consulting Engineer Services as defined by Section 65(105)(g) of the Finance Act, 1994 at the relevant time. Since these are taxable services and the foreign service provider does not have any fixed establishment in India in view of provisions contained in Section 68 of Finance Act, 1994, appellant i.e. service recipient, was required to discharge the service tax liability.
➢ The issue decided by the Apex Court in case of the ACC referred to by the Chartered Accountant, was in respect of the valuation of the drawings imported and Hon'ble Supreme Court has in view of rule 9 of the Customs Valuation Rules, 1988 as they existed then held that value of such services shall be the part of the value of imported goods. This decision does not lay down that these services are goods for the purpose of levy of Customs duty. ➢ By not disclosing the facts in respect of the services received to the concerned service tax authorities, appellants have wilfully suppressed the facts in respect of the receipt of these taxable services and hence extended period of limitation has been rightly invoked for determination and recovery of service tax not paid by the appellants.
➢ Issue is not revenue neutral in any case if the appellants claim it to be revenue neutral they would have not preferred this appeal and have just paid the service tax and taken the admissible benefits. This view is supported by the decision of the Apex Court in case of Star India [] ➢ Since demand for Service Tax is sustainable so is the demand for interest.
7➢ Since Appellants have short paid the service tax the penalties imposed on them are also justified.
4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments.
4.2 Undisputedly Appellants have entered into contract for provision of services with the overseas service provider. The terms of Contracts are univocal and clear to this effect. The defence put forth by the Appellants for not paying the service tax on the service received by them in terms of Section 68 of Finance Act, 1994, is that they have discharged the customs duty, on the documents, drawing and designs received by them by adding the value of these as per the decision of Apex Court in case of ACC, and hence demand of service tax on the same is contrary to the view expressed by the Apex Court, treating drawing and designs as goods.
4.3 We are not in position to agree with the submissions made by the Appellant by relying on the decision in case of the Associated Cement Company [2001 (128) E.L.T. 21 (S.C.)]. In the said decision Apex Court has held as follows:
"As is evident from the perusal of the aforesaid provisions, namely, Sections 12 and 14 of the Customs Act and Rules 3,4 and 9 the value of the goods which are imported is deemed to be the price at which they are ordinarily sold. Sub-section (1A) provides that the price referred to in sub- section (1) of Section 14 shall be determined in accordance with the rules made in this behalf. As per Rules 3 and 4 the transaction value of the imported goods, subject to adjustment under Rule 9, is to be the price actually paid or payable for the goods when sold for export to India. Rule 9 (1) (b) (iv) is important for that shows that engineering, development, artwork, design work and plans and sketches would form part of the price of goods for the purpose of determining its value for levy of duty. In this connection, it will be useful to refer to the following passage from a decision of this Court in the case of Collector of Customs (Prev.), Ahmedabad vs. 8 Essar Gujarat Ltd. 1996 (88) E.L.T. 609 (S.C.) at page 616 para 17:
"The entire purpose of Section 14 is to find out the value of the goods which are being imported. The EGL in this case was purchasing a Midrex Reduction Plant in order to produce sponge iron. In order to produce sponge iron, it was essential to have technical know-how from Midrex. It was also essential to have an operating licence from them. Without these, the plant would be of no value. That is why the pre-condition of a process licence of Midrex was placed in the agreement with TIL. It will not be proper to view that agreement with TIL in isolation in this case. The plant would be of no value if it could not be made functional. EGL wanted to buy the plant in working condition. This could only be achieved by paying not only the price of the plant, but also the fees for the licence and the technical know-how for making the plant operational. Therefore, the value of the plant will comprise of not only the price paid for the plant but also the price payable for the operation licence and the technical know- how. Rule 9 should be construed bearing this in mind. (Emphasis added)"
Significantly Chapter 49 also includes items which have substantial intellectual value as opposed to the value of the paper on which it is put. Newspapers, periodicals, journals, dictionaries etc. are to be found in Chapter 49 wherein maps, plans and other similar items are also included, while Chapter 97 talks about original engravings. It is clear that intellectual property when put on a media would be regarded as an article on the total value of which customs duty is payable."
4.4 This decision of the Apex Court do not alter the nature of contract, but in view of the specific provisions in terms of Rule 9 of the Valuation Rules as it existed then added the value of certain services in the value of the goods imported for the purpose of determination of Customs Duty. In case of C K Jidheesh [2006 (1) STR 3 (SC)] Hon'ble Supreme Court held as follows:
9"Thus, a mere challenge to such a clarificatory letter is not enough. The challenge has to be to the provisions of the Finance Act. The provisions of the Finance Act had been challenged by the Kerala Colour Labs Association. That challenge had been repelled by the Kerala High Court and an SLP against that Judgment has already been dismissed by this Court. We have read the Judgment of the Kerala High Court. In our view, the Judgment correctly considers all aspects including the aspect of double taxation. We find no infirmity in that Judgment. The principles set out therein fully apply here also. There is one further difficulty in the way of the Petitioner. This Court has, in the case of Rainbow Colour Lab & Anr. vs. State of M. P. & Ors., reported in (2000) 2 SCC 385, held that contracts of the type entered into by persons like the Petitioner are nothing else but service contracts pure and simple. It is held that in such contracts there is no element of sale of goods. This Judgment is binding on this Court. In view of this Judgment, the question of directing the Respondent to bifurcate the receipts into an element of goods and the element of service cannot and does not arise. We see no substance in the contention that facts in Rainbow Colour Labs case were different inasmuch as in that case the Court was dealing with a case where photographers take photographs, develop them and then give the photos to the customer. In our view, the ratio of Rainbow Colour Lab's case also applies to cases like the present.
Faced with this situation, Mr. Venugopal submitted that the correctness of Rainbow Colour Lab's case has been doubted by a Bench of three Judges in the case of Associated Cement Companies Ltd. vs. Commissioner of Customs, reported in (2001) 4 SCC 593. He relied upon the following observations of this Judgment: "26. In arriving at the aforesaid conclusion the Court referred to the decision of this Court in Hindustan Aeronautics Ltd. v. State of Karnataka [(1984) 1 SCC 706 : 1984 SCC (Tax) 90] and Everest Copiers [(1996) 5 SCC 390]. But both these cases related to the pre-Forty-sixth Amendment era where in works contract the State had no jurisdiction to bifurcate 10 the contract and impose sales tax on the transfer of property in goods involved in the execution of a works contract. The Forty-
sixth Amendment was made precisely with a view to empower the State to bifurcate the contract and to levy sales tax on the value of the material involved in the execution of the works contract, notwithstanding that the value may represent a small percentage of the amount paid for the execution of the works contract. Even if the dominant intention of the contract is the rendering of a service, which will amount to a works contract, after the Forth- sixth Amendment the State would now be empowered to levy sales tax on the material used in such contract. The conclusion arrived at in Rainbow Colour Lab case, in our opinion, runs counter to the express provision contained in Article 366(29-A) as also of the Constitution Bench decision of this Court in Builders' Assn. of India v. Union of India [(1989) 2 SCC 645]."
He submitted that, in view of these observations, the Judgment in Rainbow Colour Lab case must be deemed to have been overruled and/or in any event it is required to be reconsidered by a larger Bench. We are unable to accept this submission. In Associated Cement Companies' case, the question was whether or not custom duty could be levied on drawings, designs, diskettes, manuals etc. The argument there was that these were intangible properties and not goods as defined in Section 2(22) of the Customs Act. The question of levy of service tax did not arise in that case. The observations relied upon are mere passing observations and do not overrule Rainbow Colour Lab's case. Even otherwise, the questions raised in this Petition are fully covered and answered by the decision of the Kerala High Court, which we confirm as laying down the correct law."
4.5 In case of Imagic Creative Pvt Ltd [2008 (9) STR 337 (SC)], Hon'ble Supreme Court expressed the same view in respect of its decision in case of Associated Cement Company and held as follows:
1121. Evidently, therefore, the decision of Associated Cement Company Supra) whereupon strong reliance has been placed by the Tribunal as also by the High Court seeks to make a distinction between cases arising out of works contract wherefor sales tax is liable to be paid and the cases under the Customs Act.
22. Our attention has furthermore been drawn to the decision of this Court in Bharat Sanchar Nigam Ltd. (supra) wherein referring to Tata Consultancy (supra) it was observed that the approach of this Court in the said decision as to what would be goods for the purpose of sales tax is correct.
"23. What, however, did not fall for consideration in any of the aforementioned decisions is the concept of works contract involving both service as also supply of goods constituting a sale. Both, in Tata Consultancy (supra) as also in Associated Cement Company (supra), what was in issue was the value of the goods and only for the said purpose, this Court went by the definition thereof both under the Customs Act as also the Sales Tax Act to hold that the same must have the attributes of its utility, capability of being bought and sold and capability of being transmitted, transferred, delivered, stored and possessed. As a software was found to be having the said attributes, they were held to be goods.
24. We have, however, a different problem at hand. Appellant admittedly is a service provider. When it provides for service, it is assessable to a tax known as service tax. Such tax is leviable by reason of a Parliamentary statute. In the matter of interpretation of a taxing statute, as also other statutes where the applicability of Article 246 of the Constitution of India, read with Seventh Schedule thereof is in question, the Court may have to take recourse to various theories including aspect theory, as was noticed by this Court in Federation of Hotel & Restaurant Association of India, etc. v. Union of India & Ors. [(1989) 3 SCC 634].12
25. If the submission of Mr. Hegde is accepted in its entirety, whereas on the one hand, the Central Government would be deprived of obtaining any tax whatsoever under the Finance Act, 1994, it is possible to arrive at a conclusion that no tax at all would be payable as the tax has been held to be an indivisible one. A distinction must be borne in mind between an indivisible contract and a composite contract. If in a contract, an element to provide service is contained, the purport and object for which the Constitution had to be amended and clause 29A had to be inserted in Article 366, must be kept in mind.
26. We have noticed hereinbefore that a legal fiction is created by reason of the said provision. Such a legal fiction, as is well known, should be applied only to the extent for which it was enacted. It, although must be given its full effect but the same would not mean that it should be applied beyond a point which was not contemplated by the legislature or which would lead to an anomaly or absurdity.
27. The Court, while interpreting a statute, must bear in mind that the legislature was supposed to know law and the legislation enacted is a reasonable one. The Court must also bear in mind that where the application of a Parliamentary and a Legislative Act comes up for consideration; endeavours shall be made to see that provisions of both the acts are made applicable.
28. Payments of service tax as also the VAT are mutually exclusive. Therefore, they should be held to be applicable having regard to the respective parameters of service tax and the sales tax as envisaged in a composite contract as contradistinguished from an indivisible contract. It may consist of different elements providing for attracting different nature of levy. It is, therefore, difficult to hold that in a case of this nature, sales tax would be payable on the value of the entire contract; irrespective of the element of service provided. The approach of the assessing authority, to us, thus, appears to be correct.13
34. We may notice that the concept of aspects theory which had found echoes in State of U.P. Another v. Union of India & Anr. [(2003) 3 SCC 239] has expressly been overruled by a Three Judge Bench in Bharat Sanchar Nigam Ltd. (supra) stating :
78. But if there are no deliverable goods in existence as in this case, there is no transfer of user at all. Providing access or telephone connection does not put the subscriber in possession of the electromagnetic waves any more than a toll collector puts a road or bridge into the possession of the toll payer by lifting a toll gate. Of course the toll payer will use the road or bridge in one sense. But the distinction with a sale of goods is that the user would be of the thing or goods delivered. The delivery may not be simultaneous with the transfer of the right to use. But the goods must be in existence and deliverable when the right is sought to be transferred."
4.6 In view of the decisions as above we do not find any merits in the submissions made by the learned Chartered Accountant to effect that since the value of services received by the Appellant from the overseas suppliers was included in the value of the goods imported by them, as per the decision of Apex Court in case of Associated Cement Company, supra, these services could not be subjected to service tax leviable under Finance Act, 1994.
4.7 Appellants have argued the case on limitation. They have made two fold submissions:
➢ Firstly they state that all the facts were made known to the department at the time of filing the documents at the time of importation of the goods, for the clearance of the same from Customs. In fact on the basis of information provided Customs has determined the assessable value of goods and duty accordingly which was paid by them. It is their submission that once they had declared all the facts to the Customs, the they are not guilty of suppression and hence 14 extended period of limitation cannot be invoked against them;
➢ Secondly since the amount of service tax paid by them in respect of services received from the overseas service provider on reverse charge basis as per Section 68 of Finance Act, 1994 will be available to them as CENVAT credit hence the demand is revenue neutral.
4.8 We do not find any merits in either of the submissions made by the appellant to challenge the demand on ground of limitation for the reasons as stated below:
➢ Revenue cannot deny that the appellants had made the disclosure of the contract with the overseas service provider to the Customs Authority at the port of clearance of the imported goods. However it is also a fact that no disclosure of the same was made to jurisdictional Service Tax authorities, nor was any declaration in respect of these services received was made on the ST-3 returns filed by the party. Customs Authority at the port of clearance of the goods is distinct from the jurisdictional Service Tax authorities. Just because there is loose coupling of the two tax administering authorities at the level of the Board (CBEC as it existed then), it cannot be said that both the authorities are one. As per the scheme, itself, Customs Duty is levied as per the provision of the Customs Act, 1962 and the rules made there under and Service Tax is levied in terms of provisions of Finance Act, 1994. Even the authorities administering the respective statue have been separately defined in the statute itself. There is no overlap or unification envisaged in either of the statues for any purpose. That being so, declarations made in terms of one statue cannot be deemed to be the declaration made under the other statue, nor the declaration made to one authority can be considered as a declaration made before the other and all authorities. It is a settled principle in law that when a statute provides a method of performance, 15 then that alone is correct and all other methods are necessarily barred. It is also a settled principle that, nobody should be allowed the benefit of his own wrongs {Nullus commodum capere potest de injuria sua propria (Co. Litt. 148 b.), S.B. International Ltd. And Ors. [1996 (82) ELT 164 (SC)]}. Thus by not making proper and complete declaration in respect of the services received from overseas service provider, before the jurisdiction Service Tax Authorities and in their ST-3 return, on which service tax was to be discharged by the Appellant's as per section 68 of Finance Act, 1994, Appellant have suppressed the necessary information and for the said suppression service tax demand invoking extended period limitation as per proviso to Section 73(1) is justified.
➢ The admissibility of credit of the tax paid cannot be ground for the non payment of tax, as this goes against the basic spirit of the taxing statute. If the argument of revenue neutrality was to be considered a valid argument under the scheme of Finance Act, 1994, then entire provisions relating to payment of service tax on reverse charge will become otiose and every service recipient will claim that whatsoever service tax he pays on reverse charge basis will be available to him as CENVAT Credit. Arguments of revenue neutrality thus would not be available in cases where the service tax is demanded by the recipient of service on the reverse charge basis. Hon'ble Supreme Court has in case of Star Industries [2015 (324) ELT 656 (SC)] dismissing the argument of revenue neutrality held as follows:
"35. It was submitted by the learned counsel for the assessee that the entire exercise is Revenue neutral because of the reason that the assessee would, in any case, get Cenvat credit of the duty paid. If that is so, this argument in the instant case rather goes against the assessee. Since the assessee is in appeal and if the exercise is Revenue neutral, then there was no need even 16 to file the appeal. Be that as it may, if that is so, it is always open to the assessee to claim such a credit."
➢ In case of Dharampal Satyapal [2005 (183) ELT 241 (SC)] Supreme Court has dismissed the argument of revenue neutrality on the basis of availability of MODVAT Credit stating as follows:
"25.Modvat is basically a duty collecting procedure which provides relief to the manufacturer on the duty element borne by him in respect of the inputs used by him. The relief is given under the modvat scheme on the actual payment of duty on the input. On such payment, the assessee gets a right to claim adjustment/set-off against the duty on the final product. The question of duty adjustment/set-off against duty on the final product was not in issue. In any event, no record on credit entitlement was produced. A right to claim proforma/modvat credit against duty on final product was different from the defence of bonafides in a case where circumstances mentioned in the proviso to section 11A(1) stands proved by the department for invoking larger period of limitation. The burden to prove the defence of bonafides was on the assessee and the assessee in this case has failed to prove its bonafides. Under modvat, excisable finished products made out of duty-paid inputs are given relief of excise duty to the extent of duty paid on inputs. In the circumstances, we are satisfied that the department was justified in invoking the extended period of limitation under the proviso to Section 11A(1)."
Thus we uphold the demand made in this Show Cause Notice by invoking the extended period of limitation as per proviso to Section 73(1) of Finance Act, 1994.
4.9 Since the demand of tax has been upheld the demand for interest will follow. It is now settled law that interest under Section 75, is for delay in the payment of tax from the date 17 when it was due. Since appellants have failed to pay the said Service Tax by the due date interest demanded cannot be faulted. In view of the decisions as follows ➢ P V Vikhe Patil SSK [2007 (215) ELT 23 (Bom)] ➢ Kanhai Ram Thakedar [2005 (185) ELT 3 (SC)] ➢ TCP Limited [2006 (1) STR 134 (T-Ahd)] ➢ Pepsi Cola Marketing Co [2007 (8) STR 246 (T-Ahd)] ➢ Ballarpur Industries Limited [2007 (5) STR 197 (T-Mum)] 4.10 Now coming to the issues in relation to penalties imposed on the Appellant. There cannot be any dispute to effect that by not making proper declaration and disclosures to the concerned authority, appellant have contravened the provisions of Finance Act, 1994 and the Rules made themselves. For such contraventions they are liable to penalty as provided under Section 76, 77 & 78 of Finance Act, 1994. However we also note that Appellants are a Public Sector Undertaking, and Section 80 of Finance Act, 1994 provides as follows:
"80. Notwithstanding anything contained in the provisions of Section 76, Section 77, Section 78 or Section 79 , no penalty shall be imposable on the assessee for any failure referred to in the said provisions, if the assessee proves that there was reasonable cause for the said failure."
In case of HUDCO, [2012 (26) STR 531 (T-Ahd)] Ahmedabad Bench of CESTAT held as follows:
"22. An alternative submission was made that the provisions of Section 80 are invocable in this case. According to Section 80 of Finance Act, 1994, "provision of Section 76, 77 or 78, no penalty shall be imposable on the assessee for any failure referred to any such provision, if the assessee prove that there was a reasonable cause for the said failure." We consider that the appellant being a wholly owned government company and the fact that they did not pay Service Tax only on prepayment charges and reset charges and also in view of the fact that accounting treatment given to these items as additional interest 18 has been accepted by the Income Tax department, in our opinion, would be sufficient for invoking provisions of Section 80 of Finance Act, 1994. Accordingly, while upholding the demand of Service Tax and interest, penalties imposed under various Sections of Finance Act, 1994 are set aside."
Thus taking note of the fact that Appellants are a public sector undertaking, amounts demanded as service tax will be admissible to the Appellants will be admissible to them as CENVAT Credit and the provisions of Section 80 of the Finance Act, 1994, in our view though the penalties under Section 76, 77 & 78 are imposable, they should be waived by the application of Section 80.
5.1 In light of the discussions as above the appeal is partly allowed to the extent of setting aside the penalties imposed on the Appellant. To that extent impugned order is modified and the demand of service tax along with interest is upheld.
(Order pronounced in the open court on 08.06.2020) (S.K. Mohanty) Member (Judicial) (Sanjiv Srivastava) Member (Technical) tvu