Custom, Excise & Service Tax Tribunal
Commissioner Of Service Tax, Chennai I vs A D Padma Singh Isaac on 27 October, 2017
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI
Appeal No. ST/41554/2017
(Arising out of Order-in-Appeal No. 93/2017 (STA-I) dated 27.2.2017 passed by the Commissioner of Central Excise (Appeals I), Chennai)
Commissioner of Service Tax, Chennai I Appellant
Vs.
A D Padma Singh Isaac Respondent
Appearance Shri R. Subramaniyam, AC (AR) for the Appellant Shri N. Viswanathan, Advocate for the Respondent CORAM Honble Ms. Sulekha Beevi C.S., Member (Judicial) Date of Hearing / Decision: 27.10.2017 Final Order No. 42467 / 2017 Brief facts are that the respondent was the proprietor of M/s. Aachi Spices and Foods and was engaged in the manufacture of food products viz. pickles, ready mix pastes etc. The entire food products manufactured by the respondents were sold to M/s. Aachi Masala Foods Pvt. Ltd., Chennai who in turn markets the same in India as well as abroad. During 2009 10, the respondent obtained trade mark registration in respect of Aachi brand and started getting royalty charges from M/s. Aachi Masala Foods Pvt. Ltd. for using their brand name. Apart from that the respondent also rented out his properties to various commercial establishments and collected rent. The respondent obtained service tax registration for providing renting of immovable property service and intellectual property service. During the course of audit, as per the balance sheet for the year 2010 11, it was found that the royalty charges received by them are liable to service tax under intellectual property services. On being pointed out by audit, they paid the entire demand however had not paid the interest for the belated payment. Hence a show cause notice dated 14.6.2013 was issued which after adjudication confirmed and appropriated the demand of Rs.26,04,579/- along with interest thereof and imposed penalties under sections 77 and78 of the Act. Aggrieved, the respondents filed appeal before Commissioner (Appeals) who vide order impugned herein set aside the penalties imposed. Hence this department appeal.
2. On behalf of Revenue, the ld. AR Shri R. Subramaniyam reiterated the grounds of appeal. He submitted that the Commissioner (Appeals) has erred in invoking section 80 to set aside the penalties.
3. On behalf of respondent, ld. counsel Shri N. Viswanathan adverted to para7 of the impugned order and submitted that the Commissioner (Appeals) has observed that the respondent is not liable to pay the service tax and the same has been paid when being pointed out by audit. The period involved in 2010 2011 and that there is no illegality in invoking section 80 to set aside the penalties. He drew attention to point Nos. 5, 6 and 7 of the grounds of appeal and submitted that department seems to have confused application of section 80 with the sub-clause introduced for a short period in regard to renting of immovable property services so as to waive the penalties if the service tax is paid within specific period. That the said sub-clause is not applicable to the present case.
4. Heard both sides.
5. The observation of the Commissioner (Appeals) in para 7 of the impugned order is relevant for discussing the issue of imposing penalty and is reproduced as under:-
In view of the above, the clear position of law is that the permanent transfer of IPR does not attract the levy of service tax. However, it is on record that the appellant collected service tax of Rs.26,04,579/- from the service provider. The appellant has averred that due to an inadvertent mistake by had charged and collected service tax on the above activity and on being pointed out by audit they paid the same vide challan No. 00052 dated 9.5.2012 which was duly confirmed and appropriated by the respondent vide impugned order, hence they should be held eligible for the benefit of section 73(3) of the Act. The appellant further submitted that they paid interest of Rs.3,89,617/- on 21.4.2016 and intimated the same to the department vide their letter dated 9.5.2016 and submitted a copy of the same.
6. From the above it is brought out that respondents have paid the service tax before issue of show cause notice. Further, it is recorded by the Commissioner (Appeals) that the services would not attract levy of tax. In such circumstances, the respondents cannot be held guilty of suppression of facts so as to impose penalty under section 78. On the totality of facts brought out, I find no ground to interfere with the impugned order. The appeal is dismissed.
(Operative portion of the order was pronounced in open court) (Sulekha Beevi C.S.) Member (Judicial) Rex 4