Maddi Lakshmaiah & Company Ltd. Vs Pr. Commissioner of Central Tax Guntur – GST (CESTAT Hyderabad)
The appeal concerns imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994 in relation to service tax liability on Renting of Immovable Property Service (RIPS) and Goods Transport Agency (GTA) services. The appellant had earned rental income during June 2007 to March 2011, which the department considered taxable. Although the appellant had paid the entire service tax liability of ₹5.41 crore along with interest, the department issued a show cause notice proposing penalties. Earlier, the Tribunal had remanded the matter for reconsideration limited to the issue of penalties.
The adjudicating authority imposed substantial penalties under Sections 76, 77, and 78 for RIPS, while dropping penalties relating to GTA services due to settlement under the Sabka Vishwas Scheme. The appellant challenged only the penalties, arguing that the tax liability arose due to retrospective amendment introduced by the Finance Act, 2010, which expanded the scope of RIPS with effect from 1 June 2007. It was submitted that the issue was interpretational and subject to litigation, with conflicting judicial views. The appellant also relied on statutory provisions granting immunity or waiver of penalties where tax and interest were paid, and contended absence of suppression or intent to evade tax.
