No penalty on sums wrongly collected as service tax

[2015] 58 taxmann.com 57 (Punjab & Haryana)

HIGH COURT OF PUNJAB AND HARYANA

Ajay Kumar Gupta

v.

Customs, Excise & Service Tax Appellate Tribunal

Section 76, read with sections 68 and 73A, of the Finance Act, 1994 - Penalty - For failure to pay service tax - Assessee collected service tax on non-taxable 'legal consultancy services' - On department's insistence, assessee paid said amount under section 73A - Department levied penalty under section 76 - HELD : Section 68 provides that person providing taxable service to any person shall pay service tax; in this case, assessee was not liable to pay service tax though he had collected same and paid under section 73A(2) - Once assessee was not liable to pay under provisions of section 68 since he was not providing taxable service at that point of time, penalty imposable under section 76 was not leviable [Paras 8 to 10] [In favour of assessee]

Section 78, read with sections 65(105)(zzzzm), 68, 73A and 73B, of the Finance Act, 1994, sections 11AC, 11D and 11DD, of the Central Excise Act, 1944 and sections 28B and 114A of the Customs Act, 1962 - Penalty - For evasion of duty/tax - Assessee collected service tax on non-taxable 'legal consultancy services' - On department's insistence, assessee paid said amount under section 73A - Department levied penalty under section 78 - HELD : Once service tax was not leviable under section 68 at that point of time and liability was only to deposit tax under section 73A(2), but due to service being not taxable, case would not fall under section 78 for invoking of penalty - In view of categorical stand of assessee that service tax had been collected by mistake, on account of new provision and office of assessee was not fully acquainted with interpretation of statute due to which default had occurred, hence, Tribunal was not justified to hold that there was a wilful suppression of facts, to bring it within ambit of section 78 [Paras 10 to 12] [In favour of assessee]