Service Tax
TRT-2025-
Date:-02-08-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 02 August 2023
Parties: M/s GSKCH Employees Co-Operative Canteen Ltd. Vs Commissioner of Central Excise, Chandigarh II
Facts –
- The Appellant, M/s GSKCH Employees Co-Operative Canteen Ltd. is a co-operative society and engaged in providing the canteen services to M/S GlaxoSmithKline Consumer Healthcare Pvt. Ltd. („GSKCH Ltd.‟) pre19.09.2002.
- For the purposes of operation of the Appellant‟s canteen, GSKCH Ltd. provided space within the factory premises for running the canteen and also some materials and fixed assets to the Appellant. Also, in cases of loses in any particular financial year, the Appellant often receives subsidy from GSKCH Ltd. The appellant has discharged VAT for the consideration received but no service tax was deposited on the amount received as subsidy.
- Accordingly a show cause notice was issued to the appellant proposing to recover service tax for the applicable services of outdoor catering services along with applicable interest and penalty by invoking the extended period of limitation.
Issue –
- Whether penalty can be imposed on appellant?
Order –
- The Tribunal observed that on perusal of Section 73(3) shows that if a tax is paid along with interest before the issuance of show cause notice then in that case show cause notice shall not be issued and in the present case also, the appellant had bona-fide belief that they are not liable to pay service tax but when they realised on their own, they immediately paid the service tax along with interest which is admitted in the impugned order itself.
- Further in the case of YCH Logistics (India) Pvt. Ltd. Versus it was held that in the present case, we find that the contention of the appellant that they bona fidely believed that they are not liable to pay service tax but when the audit party raised the objection that they are liable to pay service tax, then they immediately paid the service tax along with interest which is admitted in the impugned order, is justified. Consequently, in our considered view, the imposition of penalty under Section 77 & 78 is not justified and bad in law. Hence, we set aside the penalty imposed on the appellant by allowing the appeal of the appellant”.
- In this case the appellant suo-moto without being pointed by the department paid the service tax along with interest much before the issuance of show cause notice hence the issue of imposition of penalty is covered by the various decisions in favour of the appellant.
- It was held that the appellants are not liable to pay penalty under Section 77 & 78 hence the appeal of the appellant is allowed by setting aside the penalties on the appellant.
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