Order Date: 26 July 2022

Facts:

• The appellant, M/s Incredible Unique Buildcon Pvt. Ltd., is engaged in construction and is registered with the Department under the categories of Commercial or Industrial Construction Services.
• A show cause notice dated 30 September 2015 was issued to the appellant proposing to classify its services under the category of WCS for the period October 2010 to June 2012 and recover the differential duty under the proviso to Section 73 (1) of the Act along with interest under Section 75 of the Act. Penalties were also proposed to be imposed under Section 77 and 78 of the Act.
• The Commissioner passed the impugned order. Being Aggrieved the appellant filed this appeal.

Issue:

• Whether the penalties imposed under Sections 77 and 78 are sustainable?

Order:

• The Tribunal observed there is no proof of intent to evade either from the show cause notice or from the impugned order. Mere omission or merely classifying its services under an incorrect head does not amount to fraud or collusion or willful misstatement or suppression of facts. The intention has to be proved to invoke extended periods of limitation.
• The Supreme Court has delivered the judgment in the case of Larsen & Toubro dated 20 August 2015, prior to which there was no clear ruling that services which involved supply or deemed supply of goods could only be classified under WCS. The appellant had been classifying its service under the Commercial of Industrial Construction Service (‘CICS’) and Revenue never objected to it and, therefore, the appellant could have reasonably believed it to be the correct head and continued to file returns accordingly and paying duty.
• Accordingly the penalties imposed upon the appellant under Sections 77 and 78 cannot be upheld. The impugned order is set aside  and the appeal is allowed with consequential relief