Custom, Excise & Service Tax Tribunal
Pentapati Lakshmana Swamy vs Visakhapatnam - G S T on 14 May, 2019
(1) Appeal No. ST/30226/2019
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
REGIONAL BENCH AT HYDERABAD
Single Member Bench - Court - I
Service Tax Appeal No. 30226 of 2019
(Arising out of Order-in-Appeal No. VIZ-EXCUS-001-APP-211-18-19, dated 29.11.2018
passed by Commissioner of Central Excise, Customs & Service Tax (Appeals),
Visakhapatnam)
Pentapati Lakshmana Swamy .. APPELLANT
Door No. 8-12-5, Lower Tank Bund Road,
VIZIANAGARAM - 535 001.
Andhra Pradesh
VERSUS
Commissioner of Central Tax .. RESPONDENT
VISAKHAPATNAM GST, GST Commissionerate, Port Area, VISAKHAPATNAM - 535 035.
Andhra Pradesh APPEARANCE:
Shri N.V. Ramana Rao, Advocate for the Appellant. Shri C. Mallikharjun Reddy, Superintendent/AR for the Respondent.
Coram:
Hon'ble SHRI P. VENKATA SUBBA RAO,MEMBER (TECHNICAL) FINAL ORDER No. A/30515/2019 Date of Hearing: 14.05.2019 Date of Decision: 14.05.2019 [ORDER PER: Mr. P.Venkata Subba Rao)
1. This appeal is filed against Order-in-Appeal No. VIZ-EXCUS-001-APP-
211-18-19, dated 29.11.2018.
2. Heard both sides and perused the records.
(2) Appeal No. ST/30226/2019
3. The appellant herein has been registered with 'Renting of Immovable Property Service' and were therefore liable to pay service tax on renting of immovable property service. The appellant does not dispute the fact in this respect. A show cause notice dated 21.04.2015 was issued to the appellant calling upon them to explain why service tax amounting to Rs. 3,22,191/- should not be recovered from them in terms of Section 73 of the Finance Act, 1994 and why penalty should not be imposed on them under sections 76 & 77 of the Finance Act, 1994.
4. Ld. Counsel for the appellant submits that they are not disputing the service tax liability. In fact they had discharged the service tax liability on 23.04.2015 vide challan No. 05879. He draws the attention of the Bench to page Nos. 45 & 46 of the paper book in which a letter was addressed to the Deputy Commissioner of Central Excise, Visakhapatnam-I Commissionerate by the appellant giving details of the service tax paid, as reply to the show cause notice. Ld. Counsel submits that although the show cause notice was dated 21.04.2015, they received it after payment of service tax as calculated by them. He submits that the amount of service tax calculated by them was based on the total rent received by them during the period 2013- 14 minus municipal taxes paid amounting to Rs.7,79,734/-. He submits that as per notification No. 29/2012-ST, dated 20.06.2012, they are entitled to deduction of the amounts paid as municipal taxes from the value while calculating the service tax to be paid. He submits that it is not disputed by the department that they are entitled to the benefit of this notification. However, the department states that of the amount of Rs. 7,79,734/- they paid only Rs.4,52,256/- in cash on 22.03.2014 while an amount of Rs. 3,27,478/- was adjusted on account of interest due of previous payments. The department considered this Rs.3,27,478/- as being interest payable on the demand for the year which has been waived and therefore gave concession only to the extent of Rs. 4,52,256/-. He submits that as can be seen from page 25 of the paper book, this amount pertains to the interest paid during the previous year to the Municipal authorities as interest which was subsequent to payment waived. Consequent upon the waiver, the (3) Appeal No. ST/30226/2019 amount so paid during the previous year as interest has been adjusted against the service tax payable during 2013-14. He also draws the attention of the Bench to page Nos. 27 & 28 of the paper book to substantiate his claim that the amount of Rs. 7,79,734/-was paid on account of property tax only. Of this amount, some amount has been paid in cash and rest has been adjusted towards the excess payment made during the previous financial year on account of a decision to the waiver of interest during that period. In view of the above, he states that no service tax is payable on this amount. He draws the attention of the Bench of the order of the lower authority and submits that against the demand of Rs. 3,22,191/-, an amount of Rs. 2,25,815/- has already been paid by them towards the confirmed demand and appropriated in the order. He submits that this amount of Rs. 3,22,191/- was calculated erroneously by not giving abatement on account of Rs. 3,27,478/- paid as property tax to the Municipal authorities by way of adjustment against interest paid during the financial year which was subsequently waived. As far as the interest amount is concerned, the original authority has appropriated an amount of Rs. 58,496/- paid by them as interest whereas the actual amount of interest chargeable and paid by them was Rs. 60,251/-, hence this needs to be corrected. The lower authority also has imposed a penalty under section 76 which, according to Ld. Counsel, is not payable because they have discharged the full amount of service tax liability prior to the issuance of show cause notice itself. As per Section 78B (Transitory Provisions) of the Finance Act, 1994, where service tax which has not been levied or paid or short levied or short paid, has been paid before the issue of the show cause notice, no order under section 73(2) has been passed before the date on which the Finance Bill 2015 has received the assent of the President (i.e. 14.05.2015), the amended Section 76 shall be applicable and clause (i) of the proviso to Section 76(1) provided that no penalty is payable if the service tax and interest is paid within 30 days of the issue of show cause notice. Therefore, no penalty is imposable on them. As can be seen from records in this case, the show cause notice was signed on 21.04.2015 and the full amount of duty and interest paid by a challan on 23.04.2015, well before 30 days from the show cause notice. He would (4) Appeal No. ST/30226/2019 submit that it is not in dispute that the order of the lower authority was passed after the date on which the President has assented to Finance Bill 2015 i.e. 14.05.2015. He also prayed that the penalty imposed under section 77 by the lower authority also be waived under section 80 of the Finance Act, 1994, as applicable during the relevant period.
5. Ld. DR reiterates the findings of the lower authority.
6. I have considered the arguments on both sides and perused the records. The first issue to be decided is whether the service tax is payable on the amount of Rs. 3,27,478/- which the appellant has claimed as abatement on account of payment of service tax but it has not been paid in cash but has been adjusted by the municipal authorities. A perusal of the Property Tax demand notice of Vizianagaram Municipality, dated 09.11.2013 in the paper book page No. 28 shows that the demand is for an amount of Rs. 7,79,734/-. The letter from the Office of the Commissioner of Vizianagaram Municipality shows that against this demand, an amount of Rs. 4,52,256/- was paid by the appellant in cash on 22.03.2014 and an amount of Rs. 3,27,478/- as "interest amount adjusted from previous payments vide receipt No. 1093238841 due to interest waiver". A perusal of the aforesaid receipt number at page 25 of the paper book shows that this amount is towards penalty for the financial year 01.04.2011 to 31.03.2013. In view of the above, it is evident that the amount paid as property tax was Rs. 7,79,734/-and not merely Rs. 4,52,256/-. Accordingly, the demand on this account needs to be set aside and I do so. Consequently, the amount of demand confirmed in the order of the lower authority and upheld by the first appellate authority stands reduced from Rs. 3,22,191/- to Rs. 2,25,815/-. Interest is payable on this account and the amount of Rs. 60,251/- paid as interest by the appellant vide challan dated 23.04.2015 gets appropriated towards interest amount. As the appellant has already paid the amount of demand within 30 days from the issue of show cause notice, the penalty under section 76 needs to be set aside as per clause (i) of the first proviso to Section 76(1) and I do so.
(5) Appeal No. ST/30226/2019
7. I do not find sufficient reason to invoke Section 80 to set aside the penalty imposed upon the assessee under section 77(2) of Finance Act, 1994 for their failure to file service tax returns. Accordingly, the penalty under section 77(2) is upheld. Consequently, the appeal is partly allowed by modifying the impugned order as follows:
(i) The demand of Service Tax is reduced to Rs. 2,25,815/-
along with interest and the amounts already paid by them are appropriated towards the same.
(ii) The penalty under section 76 of Finance Act, 1994 is set aside.
(iii) The penalty imposed under section 77(2) is upheld.
8. The appeal is disposed of as indicated herein above.
(Dictated and pronounced in open court) (P. VENKATA SUBBA RAO) MEMBER (TECHNICAL) vrg