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January 2014

[2013] 39 taxmann.com 7 (Mumbai – CESTAT) – Jetking Infotrain Ltd. v. Commissioner of Service Tax, Mumbai

By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
Reading Time 1 mins
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Whether mere omission to declare activity before department would amount to suppression of fact and attract penalty u/s. 78 when there no suppression is alleged in the SCN.? Held, No.

Facts:
The appellant running computer coaching centres imparted computer education at different locations in India. They entered into agreements with persons to provide computer training on franchisee basis and from the fees received, they transferred the amount to the related franchise’s account after retaining 15%. The department treated this as a “franchise service” and confirmed service tax and imposed an equivalent amount of penalty apart from penalties u/s. 76 and 77 of the Act. The appellant did not contest the demand as the issue was decided against the appellant in another decision of Tribunal in similar case. For the penalty the appellant pleaded bonafide belief that the services as to non-taxability as franchise service.

Held
The penalty u/s. 78 was dropped on the ground that there is no specific allegation in the showcause notice for suppression of facts with intent to evade Service Tax and that mere omission to declare the activity would not amount to suppression of fact.

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