Custom, Excise & Service Tax Tribunal
M/S. Sify Technologies Ltd vs Cst, Chennai on 16 June, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT CHENNAI ST/165/2008 (Arising out of Revision Order No. 36/2008 dated 13.05.2008 passed by the Commissioner of Service Tax, Chennai). M/s. SIFY Technologies Ltd. : Appellants Vs. CST, Chennai : Respondent
Appearance Shri Raghavan Ramabhadran, Advocate For the appellant Shri S. Chandrasekaran, AC (AR) For the respondent CORAM Honble Shri D.N. PANDA, Judicial Member Honble Shri B. RAVICHANDRAN, Technical Member Date of Hearing/Decision: 16.06.2016 FINAL ORDER No. 41010 / 2016 Per: D.N. Panda The controversy involved in this appeal is whether appellant is entitled to get relief under Section 80 of the Finance Act, 1994, in respect of penalty imposed under section 78 of the said Act when under the confusion of law, the tax deducted at source (TDS) was not included in the gross value of the taxable services provided to compute the tax liability under Finance Act, 1994.
2. It is explained by Ld. Counsel for the appellant that it is not within the reach of common man to understand the technicalities of law as the law makers and judiciary understand. Therefore, due to confusion whether the tax deducted at source by the service recipient deposited into the treasury under income tax law shall form part of gross value of service provided, appellant could not include that part to compute liability. However, when it came to know that this part of the gross receipt is also taxable it has discharged liability thereon. Therefore, non-payment of service tax on TDS part initially and subsequent payment of service tax including the TDS in gross receipt may not be treated as suppression of fact deliberately in absence of any intention to cause evasion. There was neither malafide nor deliberate attempt to cause prejudice to Revenue. Therefore, a lenient view may be taken to appreciate that there is reasonable cause to relieve the appellant from the penal consequences under section 78 of the Finance Act, 1994, applying section 80 thereof.
3. Revenue strongly opposes the aforesaid proposition on the ground that the appellants approach was a suppression of facts for which Revenue was deprived to realize its legitimate dues. There arose a difference in view of the non-inclusion of TDS part in the gross value of the taxable services provided.
4. Heard both sides and perused the records.
5. Law at the infancy stage may certainly cause difficulties and hardship to the assessee as well as the tax gatherers since various interpretations and technicalities are involved. The facts and circumstances of the case does not demonstrate any defiant attitude of the appellant towards law. No mens rea appears to be present to appreciate that Revenue was deliberately made to suffer. In these circumstances, there appears a preventable reason to exonerate the appellant from penal consequences of law under section 78 of the Finance Act, 1994, by invoking section 80 of the Act. Therefore, there shall be no penalty under that section. We order accordingly. However, for the default period interest shall be payable.
5. In the result, appeal is allowed to the extent indicated above.
(Dictated and pronounced in open court)
(B. RAVICHANDRAN) (D.N. PANDA)
TECHNICAL MEMBER JUDICIAL MEMBER
BB
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