Section 74(1) of Finance Act Cannot be Invoked in absence of Deliberate or Intentional Non-payment of Service Tax: CESTAT

The Hyderabad bench of CESTAT ruled that Section 74(1) of the Finance Act, 1994 cannot be invoked in the absence of deliberate or intentional non-payment of service tax. \r

M/s Shri Shakti Resorts & Hotels Limited appealed against an order where the Commissioner (Appeals) had partially upheld demands based on discrepancies between declared revenue in Service Tax returns and Profit & Loss accounts. The tribunal noted that explanations provided by the appellant, including issues related to taxes collected and paid, were not adequately considered by the Department. \r

Commissioner (Appeals) set aside demands related to certain incomes but upheld liability on rental income to educational institutions. CESTAT affirmed that since deliberate suppression was not proven, the demand invoking extended period under Section 73(1) was time-barred. \r

The bench allowed the appeal, determining no penalty under Section 78 was applicable. Shri Lalit Mohan Chandna represented the Appellant, while Shri B. Sangameshwar Rao appeared for the Respondent.