FAQs on Penalties with Select Landmark Judgments: Part 2

FAQs on Penalties with Select Landmark Judgments: Part 2

Bookmark/Save this post for the future; it would be extremely useful contesting Penalties.

Research by: Abhishek Raja Ram, 9810638155

Don't forget to read till last.

Q6. Can a penalty be imposed on employees/directors for non-compliance made by the Company?

A6. NO

The company was an independent legal entity - no separate allegation against the directors. Penalty cannot be imposed on Directors.

(2024) 19 CENTAX 527 (Tri. Mad.)

Q7. Whether penalty under extended period is leviable if assessee has made disclosure in the statutory returns?

A7. NO

The appellants argue they are not guilty of fraud or evasion because they kept separate records of their trading items, informed the authorities, and filed all the required legal documents and disclosures in their Statutory Returns.

The reviewing authority agrees, finding no evidence of intent to deceive or avoid paying duties.

2022-TIOL-1182-CESTAT-KOL :: TRT-2024-790

Q8. Whether penalty can be invoked if non-payment of dues has come to notice only after audit by department?

A8. NO

Appellant had taken suo motu registration in November 2016 and had started making compliance by filing

Return and depositing admitted tax w.e.f. 01/10/2016

Further, they maintained proper records of its transactions and turnover and also filed their IT-returns

Department received some information from Income Tax Department in 2019 and issued notice for period appleant was registered under Service Tax Laws

CESTAT held that there is no suppression or failure on the part of appellant to make compliance under service tax provisions.

Rather revenue have chosen to not make any enquiry for period prior to 01/10/2016, soon after taking of registration in November 2016

Thus, allegation of revenue that appellant have concealed its particulars of turnover from service tax department is not sustainable.

2022-VIL-882-CESTAT-DEL-ST :: 2022-TIOL-1085

Q9. Whether penalty can be invoked on cases involving revenue neutral situation?

A9. NO

Where a company took on rent officer from its director and paid amount without payment of service tax (ST) under RCM, no demand could be raised as service tax paid would be claimed as cenvat credit resulting into a revenue neutral situation.

When demand is not sustainable there is no question of Penalty.

(2023) 70 GSTL 469 :: (2023) 3 CENTAX 69 :: TRT-2024-835

Q10. Whether penalty can be imposed if books of accounts are maintained and audited regularly by Department?

A10. NO

The Show Cause Notice was issued based on an audit of the records maintained by the Appellant, and therefore, an extended period cannot be invoked by alleging suppression since they are also submitting/filing the statutory returns on a regular basis.

2023-TIOL-73-CESTAT-KOL :: TRT-2024-836

Thanks, with this part the series is concluded.