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Penal Provisions
Penalties under Service Tax Law
Landmark Service Tax Judgments: Penal Provisions
Section 70(1) : Late Fees for Delay in Filing of Return :
If Half-yearly Service Tax Return (ST-3 / ST-3A) is filed after the due date of return filing then, the assessee is required to deposit late fees depending upon the period of delay. Such late fee can be a maximum of Rs. 20,000/-  [ Please Refer : Section 70(1), Finance Act, 1994)

However, according to the provisions of Service Tax Rules, 1994 (Rule 7C) some allowance is available to the assessee for if the delay in filing of return is within specified period as shown under. [Please Refer : Rule 7C, Service Tax Rules, 1994]

Delay in Filing of Return After the Due Date Late Fees
First 15 days Rs. 500/-
More than 15 days but not more than 30 days Rs. 1000/-
More than 30 days 1000 + 100 per day beyond 30 days
The Late Fee in any case Cannot Exceed Rs. 20,000/-

Illustration :

Due date is 25th April

What would be the late fees chargeable in case of filing of return of service tax under following situations.

April : 25, 26, May : 10, 11, 25, 26 28 June : 04, 05,

Solution :

Actual Date

of Filing

Particulars Late Fees
April – 25 On the due date NIL
April – 26 Within first 15 days (Even if just 1 day after the due date) 500
May – 10 Within first 15 days (15th Day after the due date) 500
May – 11 After 15 days but not more than 30 days ( It is 16th Day) 1000
May – 25 After 15 days but not more than 30 days ( It is 30th Day) 1000
May – 26 Beyond 30 days (1000 + 100 X 1) as 1 day after 30 day limit 1100
May – 28 Beyond 30 days (1000 + 100 X 3) as 3 days after 30 day limit 1300
June – 04 Beyond 30 days (1000 + 100 X 10) as 10 days after 30 day limit 2000
June – 05 Beyond 30 days (1000 + 100 X 11) as 11 days after 30 day limit 2100
For 220 Days Beyond 30 days (1000 ) + (190 Days X 100) 20000
Beyond 220 Days The Penalties shall not exceed Rs.20000
20000

 
PENALTIES

Penalty is generally levied on the assessee for intentional violation of provision of the Act or Rules made thereunder. It is penal in nature and charged to the assessee in addition to the Interest and Service Tax.

Other Points :

The authority which is levying penalty should issue a speaking order.

If assessee proves there was a reasonable cause for failure in payment of service tax  no penalty should be imposed on him [ Please Refer : Section 80, Finance Act 1994 ]

In case of Penalty amount of Rs. 1,000/- or less, the jurisdictional officer shall give an opportunity to the assessee to deposit Service Tax along with interest within 30 Days. If assessee  pays the sum  within specified time then no penalty should be levied [ Please Refer : Service Tax Circular No. 76/ 6/ 2004 – ST]

Section 76 : Penalty for Failure to Pay Service Tax :

A person, who is liable to pay service tax, but fails to pay the same, shall pay, in addition to service tax and the interest, a penalty which is not less than Rs. 100 for each day during which such failure continues or at the rate of 1% p.m. of such tax, whichever is higher, starting with the first day after the due date till the date of actual payment of service tax. However, the total penalty payable shall not exceed 50% of the Service tax Payable. [ Please Refer : Section 76, Finance Act, 1994 ]

Illustration :

A person, fails to pay service tax of Rs. 20,00,000/-. Due Date of payment was 5th January. Actual Payment is made on 20th January. What would be the amount of Penalty u/s 76?

Solution :

The default has continued for 15 days.

1% of the Service Tax for days for which default is continued

 = 1% x 20,00,000 x 15/31= Rs. 9,677/-                                                  (A)

Penalty calculated @ Rs. 100 per day for 15 days =Rs. 1,500/-             (B)

Penalty to be paid : (A) or (B) whichever is higher, i.e. Rs. 9,677/-

It is pertinent to note that there is neither methodology provided for the calculation of no. of days in the said section 76, nor the department has issued any instruction / circulars to clarify the same.

Section 77 : General Penalty & Penalty for Specific Violations :

Some Violations for which amount of Penalty to be levied is Higher out of (i) penalty which may extend to Rs. 10,000/- rupees or (ii) Rs. 200 for each day till such failure continues, starting with the first day after the due date, till the date of actual compliance.

(1)  Any person who fails to Furnish information, Produce Documents, Appear before Central Excise officer

General Penalty and Some Specific Violations for which penalty leviable may extend to Rs. 10,000/-.

(1)  Any person, who is liable to pay service tax, or required to take registration, he fails to register in accordance with the section 69.

(2)  Failure to keep, maintain or retain books of account and other documents which are required by the Act or rules made thereunder.

(3)  When tax is required to be paid electronically, failure to pay tax electronically.

(4)  Issuing invoice with incorrect or incomplete details or failure to account of invoice issued in his books of account.

(5)  Contravention of any Service Tax Provision or any rules made there under for which no penalty is provided specifically elsewhere in the Act (General Penalty)

[ Please Refer : Section 77, Finance Act, 1994 ]

Section 78 : Penalty for Suppressing Value of Taxable Service :

When service tax has been not ‘levied or paid’ or has been ‘short-levied or short-paid’ or ‘erroneously refunded’, by any of the below mentioned reason :

(1) Fraud

(2) Collusion

(3) Wilful Mis-statement

(4) Suppression of facts

(5) Contravention of any of the provisions of Service tax or of the rules made thereunder with intent to evade payment of service tax,

The person, liable to pay such evaded service tax or erroneous refund, shall also be liable to pay a penalty, ( In addition to Service Tax and Interest ) 

Amount of Penalty

Such penalty shall not be less than amount of service tax, but also shall not exceed twice, the amount of service tax so not levied or paid or short-levied or short-paid or erroneously refunded.  [ Please Refer : Section 78, Finance Act, 1994. ]

E.g. if the amount of service tax (short paid, not paid, short levied, not levied or erroneously refunded) was  Rs. 1,00,000/- then penalty shall not be less than Rs. 1,00,000/- and shall not be more than Rs. 2,00,000/-

Relaxation in Penalty Payment :-

If service tax determined u/s 73(2) along with interest and penalty are paid within 30 days from the date of communication of order determining service tax, then the amount of penalty shall be 25% of Service Tax so determined. [ Please Refer : Proviso to Section 78, Finance Act, 1994. ]

E.g. If Service Tax determined u/s 73(2) by Central Excise Officer is Rs. 1,00,000/- on 01-01-2009 and all the three i.e. Service Tax, Interest and Penalty(Reduced Amount) is paid within 30 days then penalty would be Rs. 25,000/- 

Penalty Increases/Reduces in further appeal :

Where the service tax determined to be payable is reduced or increased by the Commissioner (Appeals), the Appellate Tribunal or, the court, then, such reduced or increased service tax shall be taken into account. It must be kept in mind that benefit of relaxation of 25% penalty by payment within 30 days will be available, if the service tax so increased by higher authority, interest and increase in penalty is paid within 30 days. In such case penalty payable will be 25% of such increased penalty.

E.g. If Service Tax liability determined by Central Exercise Officer is Rs. 1,00,000/- then subsequently in appeal made the Service Tax determined by the Commissioner (Appeals) was Rs. 1,50,000/-,  in further appeal Appellate Tribunal determined tax liability of Rs. 1,20,000/- then in such case if payment is made within 30 days then amount of penalty would be Rs. 30,000/- (25% of Rs. 1,20,000/- i.e. Service Tax Liability Determined by the Higher Authority in Appeal Hierarchy)   

No Simultaneous Penalty (Amendment by Finance Act 2008) :

If the penalty is payable under this section, the provisions of section 76 shall not apply i.e. If Penalty u/s 78 is levied then Penalty u/s 76 cannot be imposed simultaneously.   [ Inserted vide Finance Bill 2008, w.e.f. 16th May, 2008 ]

It is to be considered that benefit of such reduced penalty provided u/s 78 is also available to cases where orders issued determining service tax u/s 73(2)  relate to notices prior to Finance Act 2003. [ Please Refer : Explanation to Section 78, Finance Act, 1994 ]

Any amount paid to the Central Government prior to the date of communication of the order u/s 73(2) or order issued by Appellate Authority shall be adjusted against the total amount payable. [ Please Refer : Explanation to Section 78, Finance Act, 1994 ]

78A. Penalty for offences by director, etc., of company :

Where a company has committed any of the following contraventions, namely:—

(a) evasion of service tax; or

(b) issuance of invoice, bill or, as the case may be, a challan without provision of taxable service in violation of the rules made under the provisions of this Chapter; or

(c) availment and utilisation of credit of taxes or duty without actual receipt of taxable service or excisable goods either fully or partially in violation of the rules made under the provisions of this Chapter; or

(d) failure to pay any amount collected as service tax to the credit of the Central Government beyond a period of six months from the date on which such payment becomes due, then any director, manager, secretary or other officer of such company, who at the time of such contravention was in charge of, and was responsible to, the company for the conduct of business of such company and was knowingly concerned with such contravention, shall be liable to a penalty which may extend to one lakh rupees.

Section 73D : Publication of information in respect of persons  :

If the Central Government is of the opinion that it is necessary in the public interest to publish the name of any person and any other particulars relating to any proceedings, it has power to publish such names and particulars in such manner as conferred by Service Tax (Publication of Names) Rules,2008. 

Publication under this section shall not be made in relation to any penalty until the time for presenting an appeal u/s 85 to the Commissioner (Appeals) or u/s 86 to the Appellate Tribunal, has expired without an appeal having been presented or If  the appeal, is presented, has been disposed of by the competent authority.

Whose name can be published?

Persons who have been ADJUDGED under the provision of the Act to have contravened any of the provisions of the Act or rules made thereunder with the intent to evade payment of duty. Persons who have ADJUDGED to pay but has not paid any amount u/s 73 of the Act. Adjudged means a person against whom adjudication proceedings started by department have already been completed. [Please Refer : Service Tax (Publication of Names) Rules, 2008 ]

However, In the case of artificial entities like partnership firm, company or other association of persons, the names of the partners of the firm, directors, managing agents, secretaries and treasurers or managers of the company, or the members of the association, shall also be published if circumstances of the case justify such action in the opinion of the Central Government.

Whether there is any monetary limit?

Publication of information would be resorted to only in respect of offence cases wherein the service tax liability is Rs. 1 crore or more. However, in cases of repeat offences, and in cases involving collection of an amount representing tax, not deposited, to the Central Government under section 73A of the Finance Act, 1994, the tax liability limit would be Rs.25 lakh. [Please Refer : Service Tax Circular No. 100/3/2008-ST ]

Section 80 : Penalty not to be imposed in certain cases :
If assess can prove that there was a reasonable cause then penalty shall not be levied u/s 76, u/s 77 or u/s 78. No penalty shall be imposed if there was reasonable cause for the said failure. However, such relaxation is not available in the case of interest, interest is a mandatory provision and it is levied for any delay in payment made by the assessee.
Section 83A : Power of Adjudication :

When any person is liable to a penalty, such penalty may be adjudged by the appropriate Central Excise Officer conferred with necessary powers.

Sr. No.

Central Excise Officer

Amount of Service Tax or CENVAT credit to be specified in the notice for the purpose of adjudication u/s 83A

1

Superintendent of Central Excise

Not exceeding Rs. 1 lakh (excluding the cases relating to taxability of services or valuation of services and cases involving extended period of limitation.)

2

Assistant Commissioner or Deputy Commissioner

Not exceeding Rs. 5 lakhs (except cases where Superintendents are empowered to adjudicate.)

3

Joint Commissioner

Above Rs. 5 lakhs but not exceeding Rs. 20 lakhs

4

Additional Commissioner

Above Rs. 20 lakhs but not exceeding Rs. 50 lakhs

5

Commissioner

Without limit.


Penal Provision : CENVAT Credit Rules 2004 :
Rule 14 : Recovery of CENVAT credit wrongly taken or erroneously refunded.-
Where the CENVAT credit has been taken or utilized wrongly or has been erroneously refunded, then it will have to be paid along with interest by the provider of the output service and the provisions of sections 73 (recovery) and 75 (interest) of the Finance Act, shall apply.
Rule 15 : Penalty.-
If any person, takes CENVAT credit in respect of input services, wrongly or in contravention of the provisions of these CENVAT rules in respect of any input service, then, such person, shall be liable to a penalty which may extend to maximum of Rs.  2,000/- 

In a case, where the CENVAT credit in respect of input services has been taken or utilized wrongly by reason of fraud, collusion, willful mis-statement, suppression of facts, or contravention of any of the provisions of the Finance Act or of the rules made thereunder with intention to evade payment of service tax, then, Service provider shall also be liable to pay penalty u/s 78 of the Finance Act, 1994. 

Any order levying  above mentioned  penalty shall be issued by the Central Excise Officer following the principles of natural justice, i.e. the assessee should be given the opportunity of being heard before levying such penalty order. [ Please Refer : CENVAT Credit Rules 2004, Rule 15(5) ]

Rule 15A : General penalty.-
For any contravention of these rules for which no penalty has been provided in the rules, a penalty can be levied which may extend to Rs. 5,000/-.
 

Case Laws Related

  • STO 2013 CESTAT 902
  • Penalty: Simultaneous penalty under Section 76 & 78: penalties u/s. 76 & 78 of the Finance Act, 1994 can be simultaneously imposed to the amendment of section 78 w.e.f. 10.05.2008, The decision delivered by a two Member bench will prevail upon the judgment delivered by a Single member bench. In the case of Anand Decoreters & Hirers Vs. Commissioner ST, Ahmedabad STO 2012 CESTAT 1165 ] also it has been held that penalties u/s 76 and 78 of the Finance Act are simultaneously imposable upon a assessee for the period prior to 10.05.2008.

  • STO 2013 CESTAT 900
  • Penalty: Section 76 & 78: From the facts it is evident that confirmation of duty was not simple and Adjudicating Authority also erred in quantifying the service tax liability wrongly. There can be reasonable cause on the part of the appellant that he discharged his service tax liability to the best of his ability and also paid the differential amount as soon as determined by the Audit Officers Adjudicating Authority first: Fit case for waiver of penalty by invoking Section 80.

  • STO 2013 CESTAT 934
  • Penalty: Section 76 & 78: Entire service tax and interest already Paid: Looking to the peculiar facts of the case, section 80 invoked for waiving the penalty under section 76 & 78.

  • STO 2013 CESTAT 528
  • Penalty: Entire service tax with interest paid before issuance of show cause notice: Section 73(3) attracted : Penalties set aside.

  • STO 2013 CESTAT 970
  • Penalty: Service Tax and interest Paid: No reason for imposing penalty under section 76 & 78: Department’s appeal for imposing penalty under Section 77 also rejected as facts not covered by Rule 7C of the STR, 1994.

  • STO 2013 CESTAT 626
  • Penalties: Section 76, 77 & 78: Simultaneous penalty under Section 76, 78 sustained: Penalty under Section 77 also sustained: Sickness of the Managing Director cannot be a reason for noncompliance of the provisions of the law. If the appellant could carryon with the business despite the sickness of the Managing Director, there is no reason why the appellant could not comply with the statutory provisions either.

  • STO 2013 CESTAT 810
  • Penalty: when service tax and interest is remitted even before issue of a show cause notice, provisions of Section 73 (3) disable initiation of proceedings for recovery of penalty; except where circumstances justify invocation of the provisions of Section 73(4) of the Act.

  • STO 2013 CESTAT 441
  • Penalty: Appellants paid service tax before issuance of show cause notice, therefore, situation covered by judgment of Allahabad High Court in Auto World case and Section 80 invoked for setting aside penalty. 

  • STO 2013 CESTAT 630
  • Demand: Penalty: If for the purpose of Section 80 of the Act, the assessee is not liable to pay the penalty because of bonafide doubt they entertained, for the same reason it cannot be said that the case falls in any of the categories under the proviso to Section 73(1) of the Act: Pre-deposit waived.

  • STO 2013 CESTAT 435
  • Penalty: Section 73(3): Cenvat credit wrongly availed reversed immediately and interest also paid before issuance of show cause notice: Penalty set aside. 

  • STO 2013 CESTAT 415
  • Construction Service: Demand and Penalty: Construction works carried out by the appellant for Ordinance Factory is not classifiable as 'Commercial or Industrial Construction Services' under the Finance Act, 1994, and accordingly, the demand of tax & penalty confirmed is set aside.

  • STO 2013 CESTAT 342
  • Penalty: Extended Period: Appellant has not disclosed the value, did not take registration and also did not file any Returns to the department. In such a case extended period has rightly been invoked by the Commissioner and consequently the appellant is liable to penalty under Section 78 of the Act.

  • STO 2013 CESTAT 339
  • Penalties: Service tax and interest paid before issuance of show cause notice: Contention of the appellants that in such case no notice should have been issued negated by British Airways case which says that notice can be issued: After issuance of Order, appellants failed to pay 25% of penalty within 30 days: No concession even from penalty imposed.

  • STO 2013 CESTAT 266
  • Penalties: Section 75A, 76, 77: Service tax paid along with interest: No penalty is sustainable.

  • STO 2013 CESTAT 282
  • Demand: Section 66A: Period prior to 18.4.2006: Service tax not payable on reverse charge mechanism basis.

  • STO 2013 CESTAT 168
  • Penalty: Section 78: Appellants paid service tax under reverse charge mechanism and were entitled to avail credit, hence, on ground of revenue neutrality, penalty under Section 78 set aside.

  • STO 2013 CESTAT 263
  • Penalty: Section 76: Even though there have been several occasions on which there was delay in payment of service tax, in all such cases, service tax was paid with interest and there is no dispute that payment was made before the issue of show-cause notice. Section 73(3) of Finance Act does not differentiate between a habitual defaulter and a non-habitual defaulter: Penalty set aside.

  • STO 2013 CESTAT 382
  • Penalty: Suppression of facts: Mere omission to declare the activity before the department would not amount to suppression of fact: Penalty not imposable under Section 78.

  • STO 2013 CESTAT 114
  • Manpower Recruitment or Supply Agency: Penalty: Many confusing decisions rendered during the material time: Appellant in a remote area of Gujarat could not have been guided properly by the department: Penalty set aside invoking section 80.

  • STO 2013 CESTAT 111
  • Penalty: Section 76 & 78: Incorrect utilisation of excess amount of Cenvat Credit for discharge of service tax liability : Enough balance available with the appellant and the excess utilization seems to be an inadvertent error: Inadvertent error made good by the appellant on their own by adjusting and debiting the amount in the Cenvat Credit available with them: There was no intention to evade the service tax liability as the appellant has been regularly filing returns with the lower authorities: Penalties set aside.

  • STO 2013 CESTAT 497
  • Penalty: Simultaneous penalty under Section 76 & 78: penalty should not be imposed merely on the ground that the penalty is imposable under law: Even prior to amendment in Section 78, simultaneous penalty not imposable.

  • STO 2013 CESTAT 378
  • Penalty: Section 77 & 78: Provisions of Section 73(3): Evidences available on records indicate that the appellant had no intention to suppress any information or withhold any information from the department with an intention to evade payment of service tax. In any case the appellant was eligible for Cenvat credit of service tax paid and there was no need for him to evade any payment of tax: Penalty under Section 77 & 78 set aside.

  • STO 2013 CESTAT 56
  • Penalty: Simultaneous penalty under Section 76 and 78: Amendment carried out in Section 78 of the Finance Act, 1994 is only clarificatory in nature and the position of not imposing penalty under Section 76, when penalty under Section 78 was already imposed, will hold good for the period prior to the amendment also.

  • STO 2013 CESTAT 73
  • Penalty: Section 78: Amendment carried out under Section 78 of the Finance Act, 1994 is only a clarificatory in nature and therefore simultaneous imposition of penalty under Section 76 & 78 of the Finance Act, 1994 are not imposable for the period prior to 10.05.2008 also.

  • STO 2013 CESTAT 48
  • Penalty: Service tax and interest paid before issuance of show cause notice: Section 80 invoked and penalty set aside.

  • STO 2013 CESTAT 110
  • Penalty: Section 73(3): Appellant having discharged the entire service tax liability before the issuance of show cause notice has correctly sought the invocation of the provisions of Section 73(3) of the Finance Act, 1994 which talks about non issuance of show cause notice for imposition of penalties.

  • STO 2013 CESTAT 137
  • Penalty: Non filing of ST-3 nil returns in time: Rule 7C: Waiver of late fees.

  • STO 2013 CESTAT 126
  • Penalty: Appellant has made a mistake in not including the TDS amount for the purpose of payment of service tax liability which itself shows that they do not have any intention to evade service tax: Penalty not imposable.

  • STO 2013 CESTAT 79
  • Penalty: Section 76: Late payment of service tax: Due to slow down in the realty sector during the material period they were unable to pay the amount of service tax liability in time: Plea accepted as reasonable cause: Section 80 invoked and penalty set aside.

  • STO 2013 CESTAT 70
  • Penalty: Business Auxiliary Service: Appellant under bonafide belief that service tax was not payable by commission agent: Penalties set aside.

  • STO 2013 CESTAT 52
  • Penalty: Service tax and interest paid before issuance of show cause notice: Penalty under Section 76 waived: At the time of issuance of show cause notice the amendment in Section 78 for not invoking simultaneous penalty under both sections was introduced, penalty under both Sections could not have been invoked in the notice.

  • STO 2013 CESTAT 50
  • Penalty: Section 76: Service tax with interest paid before issuance of show cause notice: Section 73(3) provides no notice to be issued in such cases: Penalty set aside.

  • STO 2013 CESTAT 71
  • Penalty: Section 76: Service tax paid along with interest before issuance of show cause notice: Reason for non payment was shown that figures from their different branches were not received during March : Penalty under Section 76 set aside.

  • STO 2013 CESTAT 93
  • Penalty: Service Tax with interest paid in routine: No penalty and no show cause notice for such cases where the same was paid before issuance of show cause notice.

  • STO 2013 CESTAT 47
  • Penalty: Penalty imposed on the ground that department issued 3 letters to which the appellants did not respond: Appellants claim of having not received letters: Benefit of doubt extended to the appellant and penalty set aside.

  • STO 2013 CESTAT 74
  • Penalty: Section 77, 78: Any payment of the service tax amount in question, whether before or after the show-cause notice was issued, would not alter the penal liability under Section 11AC of the Central Excise Act pari materia with Section 78 of the Finance Act, 1994, the apex court's ruling is applicable to the instant case.

  • STO 2013 CESTAT 14
  • Penalty: Section 76: Service tax and interest short paid: However, paid before issuance of show cause notice: Penalty set aside by invoking Section 80.

  • STO 2013 CESTAT 45
  • Commercial Coaching Service: Penalty: Waiver: Due to confusion of law the appellant has travelled a long carrying the dispute to various forum. Therefore, considering genuine difficulty of the appellant, invoking provision of Section 80 of Finance Act, 1994, penalty imposed under section 76 & 78 of the Finance Act, 1994 is waived.

  • STO 2013 CESTAT 77
  • Rent-a-cab service: Penalty: Taking note of the size of operations of the appellant and the way in which the matter has been handled by the appellant, I consider it appropriate that penalties under Section 76, which is almost equal to service tax is required to be waived by invoking provisions of Section 80 of the Finance Act, 1994.

  • STO 2013 CESTAT 49
  • Penalty: Service tax initially not paid due to confusion: Later on DGST issuing clarification about taxability: Service tax and interest paid immediately: Penalties set aside.

  • STO 2013 CESTAT 175
  • Penalty: Waiver under Section 80: Appellant pursuing his studies: All service tax paid with interest and returns filed: Section 80 invoked and penalty waived.

  • STO 2012 CESTAT 1059
  • Penalty: Wrong utilization of Cenvat credit for discharging service tax on GTA service for outward transportation: Section 80 invoked and penalty dispensed as the appellants had shown sufficient cause that they were not aware of the amendment made in the definition of output service.

  • STO 2012 CESTAT 1022
  • Penalty: Rule 7C for non filing of returns: No service provided no service tax paid, hence, no returns filed: As per Board’s Circular penalty waived as returns were nil.

  • STO 2012 CESTAT 1050
  • Penalty: Section 76 and Section 78: Simultaneous Penalty: Since this amendment has come into force w.e.f. 16th May, 2008, it cannot have retrospective operation in the absence of any specific stipulation to this effect.

  • STO 2012 CESTAT 1017
  • Penalty: Service tax without dispute: Appellant being a small proprietorship firm: Penalty set aside.

  • STO 2012 CESTAT 995
  • Penalty: Late payment of service tax on distribution of mutual funds: it is a fact that there was confusion in the initial stages of levy of service tax and the circular issued by the Board was the subject matter of various writ petitions. As such, there could be bonafide belief on the part of the appellant as regards non-payment of service tax: Section 80 invoked for waiver of penalties.

  • STO 2012 CESTAT 970
  • Penalty: Once the appellants have paid service tax disputed along with interest before issuance of show cause notice, as per Section 73(3) no show cause notice should have been issued.

  • STO 2012 CESTAT 954
  • Penalty: Non payment of ST due to several decisions in their favour: Penalty under Section 76 and 77 set aside invoking Section 80.

     

  • STO 2012 CESTAT 969
  • Penalty: Simultaneous Penalty: Penalty under Section 76 upheld, 78 set aside.

     

  • STO 2012 CESTAT 958
  • Penalty: Reverse charge mechanism: From 18.4.2006: Earlier there was confusion on taxability, hence, penalties set aside.

  • STO 2012 CESTAT 889
  • Penalty: Penalty under Section 78 reduced by granting benefit of 25% penalty.

  • STO 2012 CESTAT 882
  • Penalty: Waiver under Section 80: Circumstances: No doubt, indirect taxes permit shifting of incidence but does not immune a tax payer from tax liability in the event of non-recovery from consumers. Liability being fastened with the service provider upon incidence of tax, it was required to be seen whether the service provider at any time came forward to ascertain its liability approaching the department or having any legal opinion at its end to believe bonafide that it is not liable to tax. No legal opinion was placed before the authorities below to prove bonafide. Nor such opinion or correspondence made with department to show innocence as placed before us.

  • STO 2012 CESTAT 816
  • Penalty: Simultaneous penalty under Section 76 and 78 not imposable in view of judgment of Honorable Punjab & Haryana High Court in the case of First Flight Courier.

  • STO 2012 CESTAT 884
  • Business Auxiliary Service: Appellant providing space to banks & financial institutions and receiving commission in turn: Appellant under bonafide belief did not pay service tax: Immediately on being pointed out they paid service tax with interest: Bonafide proved and waiver under Section 80 exercised: Penalties set aside.

  • STO 2012 CESTAT 880
  • C&F Agent: Penalty: Reimbursement amount of service tax by service receiver excluded while discharging service tax under the bonafide belief: This amount reflected in returns under exempted value column: Penalty waived by invoking Section 80.

  • STO 2012 CESTAT 824
  • Penalties: Simultaneous imposition under Section 76 and 78 of the Finance Act, 1994: Looking to the judgment of Punjab & Haryana High Court that such simultaneous penalty cannot be imposed for period even prior to 10.5.2008: Stay granted.

  • STO 2012 CESTAT 821
  • Penalty: Service Tax: Government has also clarified that show cause notice should not be issued where the service tax and interest is paid before issuance of it: Penalty set aside.

  • STO 2012 CESTAT 933
  • Penalty: Revisionary authority: Original authority considered the facts and rightly exercised discretion of Section 80 for waiver of penalty: Penalty set aside.

  • STO 2012 CESTAT 802
  • Penalty: Service tax and interest paid: Penalty under Section 76 set aside: Penalty under Section 78 restricted to 25%.

  • STO 2012 CESTAT 796
  • Manpower Supply Agency: Appellants working in remote area paid service tax with interest immediately being pointed out: Penalty under Section 78 reduced to 25% if paid within 30 days and penalty under Section 77 set aside. 

  • STO 2012 CESTAT 828
  • Penalty: Section 76: Entire service tax and interest paid: Penalty set aside by other co-ordinate benches in case of appellants in similar facts and circumstances: Penalty set aside.

  • STO 2012 CESTAT 813
  • Penalty: Service tax paid before issuance of show cause notice: Interest to be worked out.

  • STO 2012 CESTAT 784
  • Penalty: Service tax with interest paid: There being no mens rea to evade payment of tax: Section 80 invoked and penalty waived.

  • STO 2012 CESTAT 765
  • Commercial or Industrial Construction Service: Works Contract: Post 1.6.2007 the appellants themselves classified the services under Works Contract and paid service tax: Prior to 1.6.2007 period involved: In similar situation, stay granted in other cases: Stay granted from pre deposit.

  • STO 2012 CESTAT 749
  • Penalty: Section 76: When penalty under Section 78 invoked and 25% of penalty amount also paid: No reason to impose penalty under Section also.

  • STO 2012 CESTAT 781
  • Rent-a-cab: Penalty: Service tax immediately paid on being pointed out by housewife doing business on small scale: Revisionary authority revised the order of adjudicating authority in not imposing penalty : Section 80 correctly invoked by the adjudicating authority, penalty not imposable.

  • STO 2012 CESTAT 753
  • Refund: Prior to registration: refund admissible.

  • STO 2012 CESTAT 848
  • Penalty: Department did not challenge waiver of penalty under Section 80 as regards penalty under Section 76, no distinction for waiver of penalty under Section 78: Departmental appeal rejected.

  • STO 2012 CESTAT 752
  • Penalty: When the assessee has paid service tax with interest, as per Section 73(3) no show cause notice was required to be issued: Penalty set aside.

  • STO 2012 CESTAT 751
  • Penalty: Non payment of service tax: Payment of service tax would entitle the appellant for Cenvat credit, hence, penalty cannot be upheld.

  • STO 2012 CESTAT 673
  • Penalty: Service tax not paid by the appellants who are exporters: Earlier and for subsequent period also in similar issue penalties set aside by Tribunal and Commissioner (Appeals): Since position of revenue neutrality arises: Section 80 invoked and penalties set aside.

  • STO 2012 CESTAT 710
  • Penalty: Once penalty under Section 78 has been imposed: Penalty under Section 76 cannot be imposed.

  • STO 2012 CESTAT 718
  • Maintenance, Management or Repair: Penalty: There were various changes during the years 2003-2006 and the appellants paid the service tax without recovering it from their clients: Penalty waived by invoking section 80

  • STO 2012 CESTAT 702
  • Penalty: Waiver under Section 80: Appellants could not pay service tax as they were under the belief that their turnover was less than Rs.8 lakhs, hence, they were not liable to pay service tax: Penalty set aside. 

  • STO 2012 CESTAT 670
  • Penalty: the appellant have paid the service tax they are entitled to take credit of the same. In that view, it cannot be said that by suppressing the fact that the appellants are going to get extra benefit on account suppression: penalty set aside.

  • STO 2012 CESTAT 737
  • Maintenance & Repair Service: Initial period of introduction: Appellant immediately got registered: Service tax payment delayed as there was confusion regarding eligibility of small scale exemption and other issues: Section 80 invoked and penalties waived.

  • STO 2012 CESTAT 639
  • Penalty: After 10.5.2008 simultaneous penalty under Section 76 and 78 cannot be imposed. 

  • STO 2012 CESTAT 857
  • Valuation: Inclusion of reimbursable expenses: Commissioner (A) set aside penalties of 76, 77 and 78 by invoking provisions of Section 80: It shows that there was no malafide intention, demand appear to be barred by limitation: Stay granted.

  • STO 2012 CESTAT 558
  • Penalty: Once the entire demand is set aside by Commissioner (A) and that order is not challenged by the department: Commissioner cannot impose penalty under Section 76 by passing a Review Order: Penalty set aside.

  • STO 2012 CESTAT 529
  • Penalty: Section 78 and 76: Amendment made on 10.5.2008 and show cause notice issued on 18.6.2008, simultaneous penalty under Section 76 not imposable.

  • STO 2012 CESTAT 557
  • Penalty: Section 76: No delay in depositing service tax with Revenue: Penalty not imposable.

  • STO 2012 CESTAT 618
  • Penalty: Section 76: Respondent has voluntarily paid the tax when the omission was pointed out to them without contesting the issue and he has also paid the penalty under Section 78. Penalty under Section 76 set aside. 

  • STO 2012 CESTAT 595
  • Penalty: Authority of Reviewing Authority to impose penalty for the first time when original authority invoked Section 80 and did not impose penalty: Held: "When the assessing authority, in its discretion has held that no penalty is leviable, by virtue of Section 80 of the Act, the revisionary authority cannot invoke its jurisdiction and impose penalty for the first time"

  • STO 2012 CESTAT 566
  • Penalty: Entire service tax paid along with interest immediately on being pointed out: No need to issue show cause notice for penalty under Section 76.

  • STO 2012 CESTAT 193
  • Penalty: Non payment of service tax on account of confusion and no malafied involved: Penalty under Section 78 set aside.

  • STO 2012 CESTAT 565
  • Manpower Recruitment Services: Non payment of service tax caused due to fraud played by consultant: Applicants should have control over the Consultant: Pre deposit of penalty ordered.

  • STO 2012 CESTAT 512
  • Penalty: Section 78: Following earlier judgment of Tribunal, penalties set aside: appeals of Revenue rejected.

  • STO 2012 CESTAT 365
  • Penalty: Option to pay 25% of duty/tax amount under Section 78 can be given at the appellate stage if not given by the original authority.

  • STO 2012 CESTAT 381
  • Penalty: Looking to the promptness of appellants in making payment of service tax immediately on being pointed out and interest later on: Provisions of Section 73(3) applied: Penalty of 25% to be allowed after re-calculating service tax giving benefit of cum tax value.

  • STO 2012 CESTAT 280
  • Penalty: Mandatory Penalty: Option to pay 25% of duty/tax within 30 days of receipt of Order not provided by original authority, the same can be provided at the appellate stage.

  • STO 2012 CESTAT 282
  • Penalty: Waiver: This is a suitable case for waiver of penalty by invoking the provisions of Section 80 of Finance Act, 1994 having regard to the facts that initially it was a partnership of husband and wife and later on the wife tried to run the coaching classes and had to discontinue and thereafter the daughter-in-law started it again. There is no indication that the same concern was continued.

  • STO 2012 CESTAT 293
  • Penalty: ST immediately paid with interest on being pointed out, situation covered by Section 73(3) of the Finance Act, 1994: ST element separately mentioned in the invoices, assessee eligible for cum-tax benefit to be deducted from the value.

  • STO 2012 CESTAT 269
  • Penalty: Penalties under Section 76 and 78 of Finance Act, 1994 are mutually exclusive even earlier to the amendment of Section 78, which permits for non-imposition of penalty and penalties are imposed under Section 78

  • STO 2012 CESTAT 220
  • Penalty: Supply of food items: Value thereof is not taxable: However, tax having been paid on it, penalty not imposable. 

  • STO 2012 CESTAT 212
  • Penalty: Penalty cannot be more than service tax confirmed: 25% option given: Penalty u/s 76 waived.

  • STO 2012 CESTAT 360
  • Penalties: Service tax paid by appellants on their own ascertainment along with interest: As per Section 73(3) no show cause notice was required to be issued: Penalties set aside.

  • STO 2012 CESTAT 214
  • Penalty: Service tax collected and retained by the appellants does not make it a fit case for waiver of penalty under Section 80.

  • STO 2012 CESTAT 256
  • Penalty: Malafide against Government company seeking exemption from the Ministry for maintenance or repair of aircrafts: No penalty to be imposed.

  • STO 2012 CESTAT 152
  • Penalty: Service Tax, interest paid immediately on being pointed out: When the law does not permit issuance of show cause notice in the like nature of case stated by both sides it is inconceivable to have adjudication proceedings.

  • STO 2012 CESTAT 112
  • Penalty: No fraud, suppression of facts, willful mis-statement involved: Provisions of Section 73(3) applicable on the amount of service tax already paid and no penalty imposable on that amount: On remaining unpaid amount 25% option under Section 78 to be extended to the appellants: Matter remanded to the original adjudicating authority.

  • STO 2012 CESTAT 200
  • Maintenance & Repair Service: Penalties: Section 76 and 78 both penalties not imposable as the appellant is a small service provider: Penalty under Section 76 set aside: Section 78 option to pay 25% of penalty within 30 days not given by original authority: Appellants may pay 25% of penalty if paid within 30 days of receipt of this order.

  • STO 2012 CESTAT 124
  • Penalty: Service tax after delay along with interest: No need to issue notice for imposition of penalty.

  • STO 2013 CESTAT 144
  • Outdoor Catering Service: Benefit of Notification No. 21/2004- S.T.: Penalty: just because the Respondent has not interpreted the Notification in accordance with the Revenue's interpretation of the notification and the Respondent as per his understanding of the exemption notification was not paying service tax and had not obtained service tax registration, his conduct can not be treated as deliberate violation of the provisions of the Finance Act, 1994 and of the Rules made there under.

  • STO 2012 CESTAT 162
  • Penalty: Service tax received from abroad tax required to be paid from 18.4.2006: Liability for 18.4.2006: Penalty set aside.

  • STO 2012 CESTAT 126
  • Penalty: Non filing of ST-3 returns: Respondents produced copies of ST-3 returns filed by them with the department: Penalty unwarranted: Departmental appeal rejected.

  • STO 2012 CESTAT 63
  • Penalty: Service tax paid late with interest due to financial problems: SCN issued invoked normal period: Penalty under section 78 cannot be sustained.

  • STO 2012 CESTAT 237
  • Penalty: Section 76, 77 & 78: Small scale unit: A small scale unit need not have to be inflicted with penalties under all these sections. 

  • STO 2012 CESTAT 181
  • Penalty: Service tax with interest paid before issuance of show cause notice provisions of Section 73(3) applicable, no notice was required to be issued.

  • STO 2012 CESTAT 97
  • Penalty: Sub-broker: ST-3 returns reflect service tax liability: ST not paid due to sudden crash in stock market and main broker did not make payments: Entire service tax with interest paid before show cause notice: It is not the case of detection by the department: Hence, penalties waived under section 80. 

  • STO 2012 CESTAT 209
  • Penalty: It is well settled law that punishment is to be given on the basis of the provisions of law prevailing at the time of occurance of the offence.

  • STO 2012 CESTAT 107
  • Penalty: Business Auxiliary Service: Providing services to financiers: During the period in dispute there was confusion, hence, bonafide belief established: Service tax and interest not being disputed: Section 80 invoked for waiver of penalties.

  • STO 2012 CESTAT 120
  • Penalty: Service tax, interest and 25% of penalty paid: Provisions of Section 73(1A) applicable: Penalty u/s 76 and 78 more than 25% is set aside.

  • STO 2012 CESTAT 75
  • Demand & Penalty: Demand confirmed due to differences found during reconciliation: Committee not dispute liability to pay service tax, the same is confirmed: Due to lack of proper software with the appellants, short payment had arisen, that is not the reason for upholding penalty, penalty under Section 76 set aside.

  • STO 2012 CESTAT 115
  • Penalty: Short payment of service tax made good immediately being pointed out: Penalty under Section 78 not imposable as taxable value was shown in the Balance Sheet: Penalty under Section 76 upheld.

  • STO 2012 CESTAT 79
  • Penalty: Before show cause notice was issued service tax was paid even interest was also paid thereafter: No penalty imposable.

  • STO 2012 CESTAT 56
  • Reimbursable expenses: Penalty: Issue of taxability against the respondents, however, no penalty to be imposed as the issue was debatable at the material period.

  • STO 2012 CESTAT 66
  • Penalty: Appellants suo moto paid service tax though late, fit case for waiver of penalty under Section 80.

  • STO 2012 CESTAT 57
  • Penalty: Section 76: Appellant is not disputing the service tax liability and interest and has already paid 25% of the service tax towards penalty under Section 78 of Finance Act, 1994, penalty under Section 76 of Finance Act, 1994 set-aside.

  • STO 2012 CESTAT 33
  • Erection Commissioning & Installation: Penalty: Looking to the fact that appellants immediately paid service tax and interest on being pointed out shows that had they been aware about their liability, there would not have been non payment of service tax: Penalty reduced by Commissioner (A) sustained.

  • STO 2012 CESTAT 64
  • Penalty: According to provisions of Section 73(1A)of Finance Act, 1994, if an assessee pays service tax, interest and 25% of service tax liability towards penalty within thirty days of issue of show cause notice, further proceedings need not be taken up.

  • STO 2012 CESTAT 34
  • Manpower Supply Service: Feeding of husk in the boilers: Penalty: Not imposable since the department itself was in confusion about classification of service.

  • STO 2012 CESTAT 31
  • Penalty: Appellant a small businessman functioning in a remote area paid service tax and interest before issuance of SCN, penalty under Section 76 set aside and 25% option given for penalty of 78.

  • STO 2012 CESTAT 17
  • Penalty: Wrong availment of cenvat credit: When credit reversed: Penalty reduced.

  • STO 2011 CESTAT 316
  • Reimbursible expenses: Clearing & Forwarding Services: Expenses being directly connected with the service admissible.

  • STO 2011 CESTAT 354
  • Service Tax: GTA service : Demand: Penalty u/s 78: It is established that for the appellant to pay 25% of the penalty in complete discharge of its penal liability under Section 78 of the Act if it paid the said amount within 30 days of the said judgment. The assessee had already paid tax and interest. Though the relevant case law dealt with Section 11AC of the Central Excise Act, the ratio of the decision is applicable also to Service tax matters since Section 78 of the Finance Act is identically worded as Section 11AC of the Central Excise Act. Since the assessee has already paid 25% of the penalty they will have no further liability to penalty under Section 78 of the Act. The appeal is thus allowed in part.(Para 6).

  • STO 2011 CESTAT 144
  • Revisionary Order: Penalty: Penalties partially set aside.

  • STO 2011 CESTAT 266
  • Business Auxiliary Service: When goods sold directly by the Company in the territory of respondents and respondents gets commission on the amount of sales directly made by company, the respondents cannot be considered as “Commission Agent” and are not eligible for exemption under Notificationn.No.13/2003 S.T.

  • STO 2011 CESTAT 225
  • Service Tax: Services of construction of residential: Demand: Penalty under Section 76 of the Finance Act, 1449. : When the penalty under Section 78 of the Finance Act has been confirmed, whether penalty under Section 76 ibid is leviable or not. Proviso 5 to section 78 has come into force with effect from 10.5.2008 (Para3). Impugned show-cause notice (period involved is 2007 to February 2009) has been issued after coming into force proviso 5 to section ibid, as per that proviso 5 to Section 78 ibid if penalty under Section 78 ibid is imposed, penalty under Section 76 ibid is not imposable. Appeal filed by the revenue is rejected.(Para 7)

  • STO 2011 CESTAT 207
  • Service Tax: Section 73 (3): Conclusion of proceedings: Once the provision under Section 73 (1A) or Section 73 (3) as the case may be, are complied with it results in conclusion of the proceedings. It is not open for the Revenue to say that penalty as applicable under Section 73(1A) is to be paid when benefit under Section 73(3) is claimed. In the circumstance, no merit in the appeal filed by the Revenue and the same is dismissed. (para 10,11)

  • STO 2011 CESTAT 121
  • Service Tax: Valuation: Banking and Financial services: Extended period of Limitation: When the respondents have not disclosed the entire taxable value in the statutory ST - 3 Return, and they have omitted to include part of the value coupled with non-payment of requisite amount of tax in respect of such amounts, it definitely amounts to suppression and willful mis-statement and hence the extended period of limitation is applicable. Hence, the order of the lower appellate authority is modified and the duty demand along with interest relating to the extended period of limitation is confirmed. (para 3)

    Service Tax: Valuation: Banking and Financial services: Penalty: Section 80: Considering the fact that the respondents are a public sector-bank and also other attendant circumstances of the case, the penalties imposed on the respondents are wavied invoking the provisions of Section 80 of the Finance Act, 1994. (para 4)

  • STO 2011 CESTAT 166
  • Service Tax: Penalty U/S 78: Appellant have paid the entire service tax before the issue of show cause notice and the interest involved before adjudication by the original authority. It is not in dispute that as recipient of services, the appellant were entitled to take credit of the service tax paid by them. Therefore, their plea that in the light of provisions of EXIM Policy, they were under bonafide belief that they were not liable to service tax deserves to be accepted especially in the light of the eligibility of cenvat credit of entire service tax paid by them. In view of the above, it is a fit case where no penalty needs to be sustained.(Para 7). The appeal of the appellant is allowed by setting aside the penalty sustained by the Commissioner (A).(Para 8). 

  • STO 2011 CESTAT 186
  • Service Tax: Security Agency Services: Show cause notice and adjudication order: Recovery provisions wrongly invoked: The show cause notice had proposed to demand service tax invoking a provision, namely Section 72 of the Act, which was not in existence on the date of issue of the show cause notice. Therefore the demand was not validly raised. Since the demand was confirmed by invoking a non-existing provision, the demand cannot survive. In the absence of a legally sustainable demand, there cannot be penalties imposed on the assessee. In the circumstances, the penalty liability of the assessee is remanded for a fresh decision by the Commissioner (Appeals). The appeal is allowed by way of remand.(Para 4). 

  • STO 2011 CESTAT 127
  • Service Tax: Business Auxiliary Services: Commission: Board Circular No. 87/05/2006-ST dated 6.11.2006: Penalties: In view of the recognized fact that there was doubt relating to the taxability of the service as noted by the Board circular dated 6.11.2006, the non-payment of tax by the respondents during the relevant period cannot be held to be intentional. Therefore, the order of the Commissioner (Appeals) in setting aside the penalties imposed under Sections 77 & 78 is justified and calls for no interference.

  • STO 2011 CESTAT 159
  • Service Tax: Penalty under Section 76: It is not in dispute that if the respondent had paid the service tax during the disputed period, they would have been eligible for the refund. This is a case of revenue-neutrality, involving no intention to evade tax. Therefore, the exercise of discretion under Section 80 of the Finance Act by the Commissioner (Appeals) was justified. However, the respondents have not filed cross objection therefore, & in the absence of appeal by the respondent, there is, no scope for setting aside penalty of Rs. 50,000/-.(Para 6). Thus there is no justification for enhancement of the penalty as sought for by the department.(Para 7). Therefore, the appeal by the department is rejected.(Para 8).

  • STO 2011 CESTAT 180
  • Service Tax: Demand: Review proceedings under Section 84 of the Finance Act, 1994: Penalty: It was held that the Commissioner was not justified in reviewing the order passed by the adjudicating authority exercising the discretion conferred under Section 80 of the Finance Act. The applicant has a strong case. Therefore, the pre-deposit of the penalties are waived and recovery of the same is stayed during the pendency of the appeal. Stay petition is allowed.(Para 4).

  • STO 2011 CESTAT 161
  • Service Tax: Business Auxiliary Service: Commission receipt from bank on loan processing: Commission received was out of the fee collected for processing of the loan by the bank. They were under the impression that since service tax was payable on the whole amount of processing fee by the Bank, no service tax was liable to be paid by them. However, on being pointed out by the department, they have promptly paid the service tax along with interest before issue of show-cause notice.(Para 4). There is no evidence adduced to contend that the respondents have deliberately failed to pay service tax. There is no evidence brought on record to contradict the above factual finding recorded by the Commissioner (Appeals).(Para 5.3). In view of the above, there is no merit in the appeal by the department and the same is rejected.(Para 6).

  • STO 2011 CESTAT 167
  • Service Tax: Demand : Business Auxiliary Services" (BAS) and "Authorized Service Station" (ASS): As regards the liability to service tax on the mandatory services rendered by the assessee as a dealer and authorized service station of Maruti vehicles, there was confusion among the trade for a long time and the same was clarified by the CBEC in 2006 by issue of Circular 87/05/2006 ST dated 06.11.2006. In the circumstances, it would appear that the assessee had justifiably held the bonafide belief that no service tax was payable on the ASS on the value of free services rendered to customers of Maruti vehicles. Revenue has not made a case for imposition of penalty on the respondents under Section 76 or 78 on the charge of AMPL evading Service Tax under this head.(Para 4.2). The assessee did not render any business auxiliary service. The business of insurance company and NBFCs was promoted by MUL and whatever commission it received had suffered Service Tax. The assessee received only a part of the tax paid amount from MUL. Therefore, no tax was leviable on the commission received by it. There are no merit in the case of the Revenue for imposing penalty on the respondents under Sections 76 and 78 of the Act in relation to the charge of evasion of tax evaded by it. Appeal filed by the Revenue is thus allowed in part.(Para 4.3).

  • STO 2011 CESTAT 122
  • Service Tax: Manpower Recruitment and Supply Agency Services: Penalty: The order of the Commissioner (Appeals) is silent on the factors relied upon by the Additional Commissioner in exercising the discretion under Sec. 80 of the Finance Act. Further, the Commissioner (Appeals) has not chosen to impose any penalty himself. He has again left it to the original authority. In view of the above, the order of the Commissioner (Appeals) insofar as the same related to direction to the original authority to consider imposition of penalty is set aside and the appeal is allowed with consequential relief as per law. (para 5.3)

  • STO 2011 CESTAT 114
  • Service Tax: Services of commission agents for procuring orders overseas: Business Auxiliary Service: Demand: The respondents have paid the entire service tax involved before the issue of show cause notice. It is not in dispute that the entire interest stands paid within one month from the date of issue of the adjudication order. It is also not in dispute that the original authority has not given option to pay 25% penalty as envisaged in proviso to Section 11AC of the Central Excise Act. In these circumstances, the Commissioner (A) was right in extending the benefit of concessional penalty in terms of proviso to Section 11AC. Even during the period prior to the amendment of Section 78 w.e.f. 10.05.08, no separate penalty under Section 76 is warranted when there is a penalty under Section 78. In the entire facts and circumstances of the case, the setting aside of penalty under Section 77 is also justified. In view of the above, there is no valid reason to interfere with the order of the Commissioner (A).(Para 6). Appeal by the department is rejected.(Para 7). 

  • STO 2010 CESTAT 737
  • Service Tax: Penalty: There should be penalty under section 77 of the Finance Act 1994 for not filing/ late filing of the return and so also for default to make payment of taxes. Contention of the Revenue on this score is confirmed. So far as the penalty under section 76 and 78 is concerned, the Apex Court did not grant any power to the Department to levy penalty ipso-facto. In view of no element of mens-rea present in the present case and presence of the elements for penalty being sine quo non this appellant should not suffer penalty as consequence under section 76 and 78 of the Finance Act 1994, for no factual finding about contumacious conduct of the appellant to cause loss of Revenue. (Para 6). Appeal are disposed. 

  • STO 2010 CESTAT 734
  • Service Tax: Waiver of penalty: Certainly when confusion is likely to occur among the tax payer about the levy itself. Such a mitigating factor may not be ruled out to be a reasonable cause under section 80 of the Finance Act 1994 to waive the penalty levied under section 76 of the said Act in absence of any malafide on the part of the appellant.(Para 4). In view of the aforesaid reasons, confirming the service tax demand, the penalty imposed under section 76 of the Finance Act, 1994 is waived. (Para 5). 

  • STO 2010 CESTAT 781
  • Service Tax: Application for stay: The appeal filed by the Revenue does not contain application in Form ST-5 and the stay application in Form ST-7 has been filed and attached. Registry is directed to issue defect memo to the appellant to file ST-5 form also. In view of the fact that the stay application does not even indicate as to why the stay is required, stay application has no merits(Para 3,4).

    Stay application rejected.

  • STO 2010 Guj 813
  • Service Tax: Man power Recruitment & Supply Agency: Penalty U/S 76: On a conjoint reading of Sections 76 and 80 of the Act, it is not possible to envisage a discretion as being vested in the authority to levy a penalty below the minimum prescribed limit. If the authority imposing the penalty is not entitled to levy below the minimum prescribed, the appellate authority and the Tribunal cannot read the provision so as being vested with such powers, namely, to reduce the penalty below the minimum prescribed.(Para 13). Matter restored to Tribunal for deciding afresh.(Para 14). 

  • STO 2010 CESTAT 599
  • Service Tax: Imposition of penalty u/s 76,77,78: Overriding effect of Section 80: Scope: Remand: Perusal of Section 80 of the Said Act, undoubtedly discloses that it will have overriding effect on the provisions of Sections 76,77 & 78, in the sense that imposition of penalty under any of this provisions is not mechanical exercise by the concerned authority. Before proceeding to impose the penalty under any of those provisions of law, the authority is expected to ascertain from the records as to wheather the assessee has established that there was reasonable cause for the failure or default committed by the assessee. Section 80 of the Said Act not only imposes an obligation on the concerned authority to ascertain wheather the assessee has established that there was reasonable cause for the failure of default but it incorporates some amount of discretion in favour of such authority to be exercised while imposing the penalty, which is conspicuously absent in the authority deciding the matter under Custom Act or Central Excise Act. The Commissioner (Appeals) in the impugned order, however, without considering the above aspects, has held that it is necessary to impose the penalty and there was no discretion in favour of the concerned authority. Undoubtedly, he has referred to the decisions of the Apex Court in the case of CCE, Indore Vs. Deepak Spinners Ltd. CEO 2004 CESTAT 22 and in the case of Dharmendra Textlie processors (supra). Both the cases are in relation to the obligation under the statutory provisions of the Central Excise Act, 1944. For the reason stated above, the impugned order passed by the revisional authority cannot be sustained.(Para 5,6,9).

    Appeal disposed of by way of remand.

  • STO 2010 CESTAT 611
  • Service Tax: Construction Services: Waiver of pre-deposit and stay on recovery: Services under which the appellant needs to be classified was brought into effect from 16.06.2005 and the period involved in this case is from June, 2005 to March, 2006. Prima facie, there could be confusion in the minds of the appellant as regards the discharge of the Service Tax liability. Therefore the view taken by the learned adjudicating authority could be a plausible view and hence the application for waiver of pre-deposit of the amount of penalties (imposed by reviewing authority), is allowed and recovery thereof stayed till the disposal of the appeal.(Para 3). 

  • STO 2010 CESTAT 578
  • Service Tax: Job work of erection/installation of pipelines: Penalties under Section 76 and 78: As per Hon’ble Kerala High Court judgement, incidents of imposition of penalty under Sections 76 and 78 are distinct and separate under two provisions and even if the offences are committed in the course of the same transaction or arise out of the same act, penalty would be imposable both under Section 76 as well as Section 78.(Para 8). The law on the point regarding imposition of penalty under Section 76 and 78 of the said Act, therefore, has been sufficiently explained by the Kerala, High Court. The imposition of penalty under Section 76 is for failure to pay the service tax by the person liable to pay the same in accordance with the provisions of Section 73 of the said Act. Penalty provided under Section 78 is for suppression of the value of the taxable service,(Para 9). There is no case for interference in the impugned order and hence the appeal fails and is dismissed.(Para 15). 

  • STO 2010 CESTAT 512
  • Service Tax: Clearing and forwarding agent's service: Demand: Stay: It is customary for the Commissioners of Central Excise to issue show-cause notices before passing revisionary orders under Section 84 of the Act for revising the Deputy Commissioner's decision.. This Commissioner, however, did not issue any such notice to the appellant. The penalty imposed on the assessee was changed by the Commissioner when he substituted 'Section 76’ for 'Section 78’ and, that too, without notice to the party. Thus granted the relief of stay prayed for by the appellant(Para 4).

    Jurisdiction: The Chief Commissioner had authorized the Commissioner of Trivandrum to discharge the functions of the Commissioner of Cochin in the absence of the latter. The learned DR has not cited any notification issued under Section 4 or 5 of the Customs Act, 1962, to enable the Commissioner of Trivandrum to exercise revisionary jurisdiction in respect of a matter which falls within the jurisdiction of the Commissioner of Cochin.(Para 3).

  • STO 2010 CESTAT 544
  • Service Tax: Outdoor Catering Services: Penalty: Stay application by Revenue: The original authority refrained from imposing penalty under Section 76 of the Act, exercising his power of discretion under Section 80 of the Act. The Commissioner held that the respondent was also entitled to relief under Section 80 of the Act for the same reasons for which the original authority waived the penalty under Section 76 of the Act. No infirmity in the impugned order. The stay application filed by the revenue is rejected as devoid of merits. (para 3)

  • STO 2010 Kar 811
  • Service Tax: Security Agency service: Penalty: Jurisdiction to reduce the penalty imposed by the Assessing Authority under Sections 76 and 78 of the Finance Act, 1994.: Imposition of penalty under Sections 76 and 78 of the Act is not automatic. A discretion is conferred on the authorities not to impose the penalty which includes imposition of penalty less than what is prescribed under law, depending upon the reasonable cause to be shown for the failure to pay the penalty. Therefore, the contention that the first Appellate Authority had no jurisdiction to reduce the penalty imposed by the Assessing Authority is incorrect.(Para 5). the assessee has been prompt in paying the service tax in respect of other customers other than BSNL, which is a Government of India undertaking. From the explanation offered and his subsequent conduct, it is obvious probably entertaining a genuine doubt, whether the service tax is payable in respect of a service rendered to BSNL, a Government of India undertaking and as they did not pay any service tax, in turn, he did not pay the service tax and after issue of show cause notice, demanded BSNL to pay service tax which they did not pay, but in order to avoid penal consequence, he has paid the tax at the earliest in two instalments.(Para 6). Under the circumstances, the Appellate Authority intended to take a lenient view and wanted to give the benefit and reduced the penalty under both heads. It cannot be said to be a wrong exercise of discretion by the Appellate Authority(Para 7). Revenue appeals dismissed. 

  • STO 2010 CESTAT 397
  • Service Tax: Authorized service station: Penalty u/s 77,78: Board had issued clarification vide circular No. 87/05/2006-S.T. dated 06.11.2006 with regard to liability of service tax, on free services given by the authorized dealers and charges reimbursed by the vehicle manufacturers and commission received by the auto dealers for introducing customers to seek finance/ loans. Tribunal has taken a view that in situations where Board issued a clarification that there was doubts and clarifies the doubts, persons who are liable to service tax cannot be held to be liable to suppression of facts and imposition of penalty. This is a fit case for applying the provisions of Section 80 of Finance Act, 1994 and waiver of penalty imposed under Section 78 of finance Act, 1994. Since Penalty under Section 77 is imposed for violation of provisions and it does not require the department to prove suppression of facts or intention to evade duty etc., hence penalty under Section 77 need not be set-aside. Accordingly, appeal is allowed.(Para 3).  

  • STO 2010 Kar 817
  • Service Tax: Rent-a-cab service: Taxability: Penalty: When once the respondent filed a NIL return and after service of show cause notice, realised her mistake and paid tax with interest and penalty, that by itself did not constitute sufficient reason to give her exemption from payment of penalty under Section 78 of the Act. This aspect, of the matter has been completely missed by the Tribunal which seems to have been unduly carried away by the fact that assessee is a lady. The Tribunal failed to notice that people who want to indulge in such malpractices, would purchase properties or carry on business in the names of housewives as their front and carry on the activities. Therefore, authorities need not unduly worry about the persons in whose names the vehicle stand, but they have to look at the substance of the case and find out if it is a case of willful evasion or bona fide error. Therefore, this is not a bona fide omission on the part of a housewife - a lady who willfully evaded service tax and suppression of fact. Therefore, the order passed by the Tribunal is illegal and requires to be set aside. The orders passed by the adjudicating authority as well as first appellate authority is upheld.(Para 7). 

  • STO 2010 CESTAT 400
  • Service Tax: Penalty under Section 76: The jurisdictional Commissioner has reviewed the order-in-original and has imposed penalty on the Appellant under Section 76 of the Finance Act, 1994. Considering several decisions of the Tribunal which has not approved simultaneous imposition of penalties under Section 76 and under Section 78 and also, taking into account the subsequent amendment in the law making both the penalties mutually exclusive, there is no justification for imposition of a second penalty under Section 76 of the Finance Act, 1994. Hence the impugned order-in-review is set aside, and the Appeal is allowed.(Para 2). 

  • STO 2010 CESTAT 399
  • Service Tax: Business Auxiliary services: Penalty u/s 76: Non- registration and non payment of service tax took place during initial period when the service tax was introduced on "Business auxiliary services" with effect from 1.7.2003 and as soon as the respondents were informed by the department that their activity was covered by the definition of "Business Auxiliary services”, they immediately discharged the tax liability alongwith interest. Moreover, the penalty under Section 77 for non filing ST-3 returns and penalty under Section 78 equal to 25% of the penalty has already been upheld by the Commissioner (Appeals). In these circumstances, there is no infirmity in the order of the Commissioner (Appeals) waiving penalty under Section 76 by invoking Section 80 of the finance Act, 1994, (Para 4). The Revenue’s appeal is dismissed. 

  • STO 2009 CESTAT 1519
  • Service Tax : Waiver of penalty u/s 76: As the matter regarding demand is pending with the Commissioner (Appeals) in the Appeal filed by the present Applicant certainly penalty is linked with the demand. In these circumstances the pre-deposit of penalty is waived(Para 3).

    Stay granted.

  • STO 2009 CESTAT 1697
  • Service Tax: Penalty u/s 78: ‘Modification Application’, for claim of benefit of the first proviso to Section 78: Scope: These applications virtually seek rectification of what is said to be apparent mistake in the final order passed by the Tribunal in the captioned appeal. In the final order of the regular Bench (majority decision), the assessee carried a penalty of Rs. 10 crores under Section 78 of the Act. It is submitted that the entire amount of service tax determined by the Commissioner under Section 73 of the Act and the entire amount of interest thereon determined under Section 75 of the Act were paid up within 30 days from the date of communication of the Commissioner's order and, therefore, any penalty leviable under Section 78 of the Act could not exceed 25% of the service tax amount by virtue of the first provision to Section 78. Firstly, the benefit of the first proviso to Section 78 was never claimed by the assessee, not even in the cross objections filed before the Tribunal. Even the essential facts necessary for claiming such benefit were never pleaded by them, not even in the cross-objections filed before the Tribunal. It is a question of fact as to whether the assessee paid the service tax with interest within the period stipulated under Section 78. This fact was never pleaded. Even though the amount of Service Tax, as it appears from the records, was paid prior to the Passing of the Commissioner's order, this fact was not brought to the notice of the Commissioner. Neither this fact nor the factum of payment of interest on tax, or relevant case laws viz. K.P. Pouches (P) Ltd. vs. Union of India CEO 2008 Del 64 etc. was brought to the notice of this Tribunal at any stage till final disposal of the appeal and cross-objections. In other words, when this tribunal pronounced the final order in the Revenue's appeal the crucial facts, which are presently brought on record, were not part of the record. Only a mistake apparent from the record can be rectified under Section 35C (2) of the Central Excise Act as applicable to Service Tax appeals.(Para 3).

    Application filed by the assessee stands dismissed.

  • STO 2009 CESTAT 1464
  • Service Tax: Banking and Financial Services /Business Auxiliary Service: Reduction penalties under Section 76 & 78: The assessee were under a bona fide belief that they were not liable to pay service tax is not tenable as service tax liability was introduced on such service from July'03 and the non-payment continued till Oct'04. Assessee is liable to penalty. However, service tax is not payable on incentives collected, in the light of the Tribunal's order in Kerala Publicity Bureau Vs CCE [STO 2007 CESTAT 1168]. The service tax liability would thus get reduced. Therefore, penalty under Section 76 is also reduced. The penalty under Section 78 is set aside as penalties under Section 76 & 78 are mutually exclusive. (Para 2).

    Revenue appeal dismissed.

  • STO 2009 CESTAT 1625
  • Service Tax: Advertisement / Broadcasting Service, Internet Service and Multi System Operator Service: Liability: The adjudicating authority has clearly given reasons for non-imposition of penalties. It is seen from the records that taxable service, namely Multi System Operator (MSO) service, was brought under purview of Service Tax levy, with effect from 10.9.2004. The period involved in this case is from October 2004 to January 2005. It is also to be noted that there was dispute with the Cable Operators regarding payment of service tax liability under this category. The reason given by the Commissioner for invoking the extended proviso to Section 73 of the Act will come into play for imposition of penalty under Sections 76 & 78 of the Act does not carry the case of revenue any further as Section 80 specifically starts with the wordings “notwithstanding” Sections 76 & 78 of the Act. The reason given by the appellant seems to be acceptable. The issue is now settled in favour of the appellant by decision of the Hon’ble High Court of Punjab & Haryana in the case of CCE, Jalandhar vs Darmania Telecom STO 2009 P&H 1737 (Para 5).

    Appeal allowed.

  • STO 2009 CESTAT 1698
  • Service Tax: Construction service: Penalty u/s 76: Appellants are a small unit and for a total Service Tax liability of Rs.1,06,495/- they have already paid Rs.2,304/- as an interest and looking to their first default and volume of turnover a lenient view is taken as far as penalty under Section 76 is concerned relying upon decision of the Tribunal in the case of CCE, Rajkot V/s. Shri B.S.G.K. Shastry in Appeal No: Service Tax/120, 121/2008, CCE, Rajkot V/s. Port Officer, Okha in Appeal No: Service Tax/126/2008 wherein it has been held that penalty under Section 76 of Finance Act, 1994 can be reduced or set aside under Section 80 of the Finance Act, 1994.(Para 4,5).

    Revenue appeal rejected.

  • STO 2009 CESTAT 1498
  • Service Tax: Waiver of penalty under Section 76 & 77 of the Finance Act, 1994: As regards to the imposition of penalty under Section 76 & 77 of Finance Act, 1994, appellants stated that there was ambiguity in their mind as regards to taxability of their service and hence they paid the Service Tax late as they were under the impression that since the Service Tax has been collected from them by the principle they are not liable for Service Tax. There is a ample force in the argument to call for lenient view as regards imposition of penalty under Section 76 of Finance Act, 1994 by virtue of Section 80 of Finance Act, 1994, in terms of CESTAT's judgment in the case of CCE, Rajkot V/s. Shri B.S.G.K. Shastry in Appeal No: Service Tax/120, 121/2008, CCE, Rajkot V/s. Port Officer, Okha in Appeal No: Service Tax/126/2008 wherein it has been held that penalty under Section 76 of Finance Act, 1994 can be reduced or set aside under Section 80 of the Finance Act, 1994.(Para 6,7).

    Revenue appeal rejected.

  • STO 2009 CESTAT 1458
  • Service Tax: Manpower recruitment agency: Reduction in penalty imposed u/s 76: The appellants are new to the Service Tax regulations. They are small unit and they have already paid entire Service Tax amount with interest along with reduced penalty and looking to their first default and volume of turnover lenient view is taken as far as penalty under Section 76 is concerned, relying upon the decision of the Tribunal in the case of CCE, Rajkot Vs. Shri B.S.G.K. Shastry in Appeal No: Service Tax/120, 121/2008, CCE, Rajkot V/s. Port Officer, Okha in Appeal No: Service Tax/126/2008 wherein it has been held that penalty under Section 76 of Finance Act, 1994 can be reduced or set aside under Section 80 of the Finance Act, 1994.(Para 5).

    Revenue appeal rejected.

  • STO 2009 CESTAT 1454
  • Service Tax: Service of Chartered Accountant: Penalty u/s 76,77: The reasons explained for delay in payment of service tax are reasonable since the work of filing returns and paying tax etc. are often left to junior staff by the assessee and such mistakes can happen. Therefore, appellants have shown reasonable cause for waiver of penalty under Section 76, which stand waived. However, Chartered Accountant is supposed to know the law and in fact advise others therefore, penalty imposed under Section 77 for contravention of various provisions of law is justified and the same is upheld.(Para 5).

    Appeal disposed off.

  • STO 2009 CESTAT 1453
  • Service Tax: Services of ‘Chartered Accountant’: Penalty u/s 76,77: The reasons explained for delay in payment of service tax are reasonable since the work of filing returns and paying tax etc. are often left to junior staff by the assessee and such mistakes can happen. Therefore, appellants have shown sufficient reasonable cause for waiver of penalty under Section 76, which stand waived. However, Chartered Accountant is supposed to know the law and in fact advise others therefore, penalty imposed under Section 77 for contravention of various provisions of law is justified and the same is upheld. (Para 5).

    Appeal disposed off.

  • STO 2009 CESTAT 1448
  • Service tax : Business Auxiliary Services : Delay in payment of tax liability : Penalty : The Circular No. 341/18/2004-TRU (Pt.) dated 17 Dec 2004 issued by the Board provides that up to December 2005 penal action may not be taken in respect of GTA services. In respect of subsequent period, the problem appears to have been because of SAP software used by the appellants. Such problems do happen when new software is introduced. It was not only a case of delay in payment but there were also several instances of excess payments which itself shows that the software took time to stabilize. Another factor that goes in favour of the appellants is that they had paid service tax in respect of imported Business Auxiliary Services which the Hon'ble Mumbai High Court in the case of Indian National Shipowners Association vs. UOI reported in STO 2009 Bom 78 had clarified that it was not liable prior to 18.4.2006. Even though the appellants were not liable to pay service tax at all, they had paid the tax on imported Business Auxiliary Services. Taking all the factors into account, it is a fit case for waiver of penalty under Section 80 of Finance Act, 1994. Penalties waived.(Para 5).

    Stay granted.

  • STO 2009 CESTAT 1411
  • Service Tax: Commissioning & installation service during July 2003 to September 2004: Imposition of penalties under Section 76, 77, & 78: Waiver of penalties: The assessee can be under the bonafide belief. Bonafide belief has to be considered in its right perspective. The appellants could have entertained bonafide belief that when they are supplying the equipment to the telecom department, the services rendered by them i.e. commissioning erection and installation and service tax is not liable to be paid. The appellants had discharged the entire service tax liability as soon as they were intimated by the authorities on 14.6.2005 itself, before the issue of show cause notice, which was issued on 16.12.2005. Provisions of Section 73(3) of the Finance Act, 1944 are clearly applicable in this case. The division bench in the case of Tide Water shipping Pvt Ltd. Vs CST Bangalore STO 2009 CESTAT 1506 on identical set of facts held in favour of assessee.(Para 5).

    Appeal partially allowed.

  • STO 2009 CESTAT 1526
  • Service Tax: Whether penalty under Section 76 for non-payment of service tax by the due date is imposable when penalty under Section 78 has been imposed: The period of dispute about 2005-05, when there was no specific provision that penalty under both Sections 76 & 78 can not be imposed. Judgment of Hon'ble Kerala High Court in the case of Asstt. Commissioner of Central Excise vs. Krishna Poduval reported in STO 2005 Ker 16 which is in favour of the Department. Same view has been taken by the Tribunal in the case of Bajaj Travels Ltd. vs CCE, Chandigarh reported in 2009(21)STR-412(New Delhi - Cestat). In view of this, the impugned order is not sustainable(Para 2).

    Revenue appeal allowed.

  • STO 2009 CESTAT 1511
  • Service Tax: Business Auxiliary Service (as commission agent) during the period from 1.7.03 to 8.7.04: Demand: Service tax demand has been confirmed even on the amount outstanding as on 9.7.04 which was in respect of the services provided during the period prior to 9.7.04, when this service was fully exempt from service tax under Notification No.13/2003-ST dt. 20.6.03. In view of Hon'ble Gujarat High Court's judgment in the case of CCE vs.Schott Glass India Pvt. Ltd. STO 2009 Guj 1796 the service tax liability arises on the date on which the taxable service is provided and not on the date on which the bill is raised or payment is received. Though liability for service tax arises on the date on which the service is provided, by virtue of Rule 6(1) of the Service Tax Rules,1994, the service tax is payable only by the 5th day of the month immediately following the calendar month in which the payment for the service provided is received towards the value of the taxable service. Since unlike Rule 5 of Central Excise Rules, 2002 there is no such similar provision in Chapter V & VA of the Finance Act,1994, or in the Service Tax Rules,1994, regarding the relevant date for determining the rate of tax, in case of service tax, the rate applicable shall be the rate in force on the date on which the taxable event of providing the taxable service occurs, not the date on which the bill is raised or payment is received. Since in this case during period prior to 9.7.04, the service of commission agent provided by a person was fully exempt from service tax, in respect of the taxable service provided during period prior to 9.7.04, even if the payment was received on or after 9.7.04, no service tax can be charged, as the exemption under notification No.13/03-ST would be available. For re-quantifying the service tax, the matter remanded to the original adjudicating authority. The contention of the appellant that they were eligible for small service provider under exemption Notification No.6/05-ST was not considered by the Asstt. Commissioner (Para 3, 3.2).

    Matter remanded to original adjudicating authority.

  • STO 2009 CESTAT 1508
  • Service Tax: GTA services: Penalty u/s 76: From the wordings of Section 80, it is clear that waiver of penalty can be granted only if there was a reasonable cause for failure under Section 76,77 and 78. In this case, when the matter was decided by the Hon'ble Allahabad High Court against the respondent on 12.8.05 and giving margin one and half month for consultation, atleast from Oct'05 onwards, there was no reasonable cause for non-payment of tax by the due date. Since as discussed above, from Oct'05 onwards, there was no reason for non-payment of service tax by due date, the respondent would be liable for penalty for period from 5.10.05.(Para 4,5).

    Revenue appeal partially allowed.

  • STO 2009 CESTAT 1521
  • Service Tax: Application for rectification of mistake: The issue before Tribunal was only about penalty is correct. The only grievance is that the request for waiver of penalty by considering that non-payment of service tax was because of bonafide belief was not considered. While passing the order, this aspect has been taken into account and it has also been observed in the order that the Commissioner (Appeals) in his order had discussed the issue of penalty in detail and the Tribunal did not find any reason to differ with the order passed by Commissioner (Appeals). The quantum of penalty and the appropriateness of the same were taken into account and the order was passed. Therefore, it cannot be said that there was a mistake to be rectified in the order as per settled law.(Para 4).

    Application for ROM rejected.

  • STO 2009 CESTAT 1468
  • Service Tax: Waiver of penalty: Appellants have not deliberately acted to evade the payment of service tax. The appellants were under the Impression that once the tax liability has been discharged at the time of purchasing the services from BSNL, and data online the further redistribution shall not attract service tax. Due to this belief, they did not collect the service tax form their customers and did not pay any service tax. The ingredients of mans-rea were not present in the case as much as the appellants did not avoid the tax liability intentionally. In these circumstances, the appellants had succeeded in proving that that the failure on their part was due to confusion and bona fide belief. This is a fit case for allowing the benefit of Section 80 of the Finance Act, 1994. No penalty is imposable on the appellants under Section 76, 77 & 78 of the Finance Act, 1994."(Para 6.1,6.2)

    Revenue appeal rejected

  • STO 2009 CESTAT 1566
  • Service Tax: Penalty u/s 76: The period of dispute of this case is 2002 to 2005 and during this period, for non-payment of service tax with intent to evade the same, penalty were imposable under Section 78 and as well as 76 and there was no specific provision that when penalty under Section 78 is imposable, the penalty under Section 76 would not be imposable. This issue stands decided in the Department's favour by Karnataka High Court in the case of CCE & ST, Bangalore vs. First Flight Couriers Ltd. (supra) and also by the Division Bench of this Tribunal in the case of Bajaj Travels Ltd. vs. CCE, Chandigarh (supra). In view of this, the impugned order setting aside the penalty under Section 76 is not sustainable and the same is set aside. The Assistant Commissioner's order with regard to imposition of penalty under Section 76 is restored.(Para 5).

    Revenue appeal allowed.

  • STO 2009 CESTAT 1421
  • Service tax: Construction of Residential Complex Service: Penalty: The finding of the adjudicating authority that the assessee was guilty of suppression remains unchallenged. Once suppression is established, penalty is automatically attracted, in the light of the apex court decision in Union of India vs. Dharmendra Textile Processors reported in CEO 2008 SC 174] therefore, finding of the Commissioner that penalty is to be imposed is acceptable.(Para 2).

    Appeal rejected.

  • STO 2009 CESTAT 1410
  • Service Tax: Reduction of penalty u/s 76 by Commissioner(A): In the case of Commissioner of Central Excise, Nashik Vs D.R. Gade STO 2007 Bom 1072 the Hon'ble Bombay High Court has held that the Commissioner (Appeals) has power either to set aside or reduce the amount of penalty imposed under Section 76, on an assessee showing reasonable cause. This order has been followed in Commissioner of Central Excise Vs Madhuri Travels [CEO 2009 Bom 892]. The department has not questioned the reason or cause shown by the assessees before the Commissioner (Appeals) for reduction in penalty. Therefore, the ratio of the above decisions are squarely applicable to the facts of the present case(Para 2).

    Revenue appeal rejected.

  • STO 2009 CESTAT 1564
  • Service Tax: Waiver of penalty u/s 76: As per the guidelines issued by the Maharashtra State Co-Op. Bank Ltd., which is the Apex body under whose jurisdiction the applicant falls, has directed them to deposit the service tax with the credit to the Central Government on or before 25th of the following month and the provisions of depositing the service tax on or before the 5th of the following month was not informed to the applicant by the Apex Body. There was no malafide on the part of the applicant and they were depositing the service tax amount under bonafide belief but on pointing out by the department, the applicant immediately deposited the interest on delayed payment as directed by the department within the stipulated period of time. Penalty waived(Para 3,5).

    Stay granted.

  • STO 2009 CESTAT 1490
  • Service Tax: Service of Maintenance & Repairs, Cleaning services, Man Power supply: Waiver of penalties u/s 76,77,78: In this case, there is no dispute about the fact that prior to March’06; the appellant had not taken registration while they were providing the taxable service of maintenance and repairs, cleaning and man power supply to M/s. NFL. These services were taxable since 2003. While the question as to whether the non-payment of service tax was deliberate and otherwise can be considered only at the time of regular hearing, at this stage, since the appellant had paid the disputed amount alongwith interest prior to the issue of SCN, in terms of the Hon'ble High Court's judgment in the case of K.P. Pouches vs UOI reported in CEO 2008 Del 64, they should have been given an option by the Asstt. Commissioner to pay penalty equal to 25% of the duty demand confirmed and since this option had not been given, they would be entitled for reduced penalty under Section 78. On payment of this amount, pre-deposit of remaining amount of penalty would stand waived.(Para 3).

    Conditional stay granted .

  • STO 2009 CESTAT 1334
  • Service Tax: Technical tests and inspection service: Waiver of penalty u/s 76,77: During the period when the delayed payment was made, Section 76 provided for penalty of Rs. 100/- per day only and Rs. 200/- per day was introduced subsequently. However, in this case penalty has been imposed at Rs. 200/- per day. Further, under Section 77 there was no provision for imposition of penalty for filing the return late which was also introduced later and therefore their case is covered by the earlier Section 77 before the amendment. The claim for lenient view under Section 80 on proper grounds was not made before the lower authorities and further the amendments in Section 76 and Section 77 were also not brought up before the lower authorities. In view of the amendments in both the sections which were brought subsequently, the matter is remanded to the Original Adjudicating Authority to decide the matter afresh (Para 2,4)

    Appeal allowed by way of remand.

  • STO 2009 CESTAT 1332
  • Service Tax: Health and fitness services: Revisionary order under Section 84 the Finance Act, 1994 to impose penalty u/s 78: Considering the fact that no reasonable opportunity of being heard was availed by the appellant and it would be appropriate for the appellant to put his submissions first before the Adjudicating Authority in his defence so that the Adjudicating Authority may pass an appropriate order on merits. Therefore, the case is remanded to the Adjudicating Authority for denovo adjudication after following the principles of natural justice.(Para 5).

    Appeal allowed by way of remand.

  • STO 2009 CESTAT 1340
  • Service Tax: Recipient of Businesses Auxiliary Services from a foreign service provider during the period 09.07.04 to 30.04.07: Liability: It has been held by the Hon'ble High Court of Bombay in the case of Indian National Shipowners Association Vs. Union of India - STO 2009 Bom 78 that in the case of foreign service provider providing service outside India, liability to service tax arises w.e.f. 18.04.06. The decision of the High Court has been followed by the Hon'ble High Court of Delhi in the case of Unitech Ltd. STO 2009 Del 877. In the case of Anant Spinning Mills - STO 2009 CESTAT 104 also it has been held that the liability to tax is only with effect from 18.04.06. In the present case the assessees have paid service tax for the period 16.06.05 onwards on 18.06.07. In the light of the fact that the liability to tax has been determined as effective only from 18.04.06, demand for the period prior to 18.04.06 is set aside. Since the assessees have paid even for a period when it has been held such a service is not exibible to tax, the tax liability will be required to be re-determined.(Para 2).

    Penalty u/s 76,78: The assessees do not dispute the liability to penalty in terms of Section 77. The assessees seek shelter under the provisions of Section 80 of the Finance Act which provides that "notwithstanding anything contained in the provisions of Section 76, Section 77 or Section 78, no penalty shall be imposable on the assessees for any failure referred to in the said provisions if the assessees prove that there was reasonable cause for the said failure. According to them, they were in a bonafide belief based upon the service tax Circular No. 36/4/01 dated 08.10.01 that they were not liable to pay service tax. Penalties u/s 76,78 set aside.(Para 3,5).

    Appeal partially allowed.

  • STO 2009 CESTAT 1630
  • Service Tax: Rent-a-Cab services" and "Business Auxiliary services": Penalty u/s 76,77,78: The appellant drew the attention of the Bench on various case laws wherein penalty was set aside on the rent-a-cab services as under a bonafide belief as well as no tax was recovered by the assessee. But, in the present case, the partner of the assessee is also Director of the other Company, which was registered with the Service Tax Authority. Thus, the case laws as relied upon by the Id. Counsel are not applicable to the present case. There is a contravention of the provisions of the Act with intent to evade payment of tax, so, the Commissioner (Appeals) rightly upheld the penalty under section 77 and 78 of the Act. The appeal filed by the assessee has no merit.

    It is seen that the assessee duly recorded the transactions in their records and also filed the returns after detention by the Officers and therefore, imposition of penalty under section 76 are not warranted and order of the Commissioner (Appeals) is proper.

    However, 1st proviso to section 78 of the Act provides that where service tax and the interest as determined under section 73 is paid within 30 days from the date of communication of the order, the amount of penalty liable to be paid by such person shall be 25% of the service tax so determined. In the present case, the assessee deposited the entire amount of tax and interest before issue of the show cause notice and, therefore, an option should be given to the assessee by the adjudicating authority in terms of the said proviso before imposing penalty of equal amount. (Para 4,5,6).

    Appeal disposed off.

  • STO 2009 CESTAT 1360
  • Service Tax: Waiver of penalty u/s 78 by appellate authority: The appellant had voluntarily applied for service tax registration and also paid service tax for the services provided. When the appellant conceded that he is not a commercial concern, he informed the authority that the appellant is not liable to service tax. Further correspondence with the department also shows that the appellant was cooperative to provide all information to Revenue. Considering the factual matrix of the case, learned Commissioner (Appeals) has noticed that facts and circumstances of the case does not provide any scope to make allegation of suppression of fact or wilful mis-statement of facts with intent to evade duty. For such reason, he waived the penalty imposed under Section 78 of the Finance Act, 1994.(Para 4,5).

    Revenue appeal dismissed.

  • STO 2009 CESTAT 1351
  • Service Tax: Imposition of penalty simultaneously under Section 76 and Section 78: Only in absence of express provision during material period for no levy of penalty simultaneously under Section 76 and Section 78 of the Finance Act, 1994, levy of penalty under both the sections was not immune. This is what has been held on 19.6.2009 in the case of Bajaj Travels Ltd Vs CCE New Delhi reported in 2009-TIOL-1063-CESTAT-DEL. Therefore, order by the learned Commissioner granting immunity from Section 76 of the Finance Act, 1994 is reversed. Accordingly, Revenue succeeds in this appeal and penalty imposed by the learned Adjudicating Authority sustains.(Para 4).

    Appeal disposed off.

  • STO 2009 CESTAT 1352
  • Service Tax: Waiver of penalty u/s 78,76: Remand: If the appellant is able to bring out a case before the learned Commissioner that it shall be covered by para 22 of the decision of the Hon’ble Court in the case of K.P. Pouches Pvt Ltd reported in CEO 2008 Del 64, the appellant may not be harshly dealt with by severe penalty. The ratio laid down in paragraph relating to penalty although was in the context of excise law that shall be squarely applicable under Section 78 of the Finance Act, 1994. Similar provision as that of Section 11AC of the Central excise Act, 1944 was incorporated into Finance Act, 1994 to mitigate hardship of the appellants. Similar issue in Bajaj Travels case decided on 19.6.2009 and reported in 2009 TIOL-1063 to CESTAT- DEL., following the ratio laid down by Hon'ble High Court of Delhi in the case of K.P. Pouches and discussion in Bajaj Travels on the levy of penalty under Section 78 of the Finance Act, 1994, the learned Commissioner to grant appropriate option under law to the appellant for which levy of penalty may be limited to the extent indicated by provisions of Section 78. The learned Commissioner (Appeals) shall also re-examine whether there shall be necessity of imposition of penalty under Section 76 of the Finance Act, 1994. (Para 4,5).

    Matter remanded.

  • STO 2009 CESTAT 1347
  • Service Tax: Liability on commission paid to foreign agent as appellant being recipient of service as per Rule 2(1) (d) (iv) of the Service Tax Rules, 1994 since 9.7.2004: Liability to service tax arises only with effect from 18.4.06 as the service provider was situated outside India and the service was provided from outside India, is prima facie tenable in the light of the ratio of the judgment of the Hon'ble Mumbai High Court in Indian National Shipowners Association Vs. Union of India [STO 2009 Bom 78] and the decision of the Tribunal in Sharadha Terry Products Ltd Vs. CCE, Salem vide Final Order No .480 and 481/09 dt.22.4.09 in which the judgment of the Hon'ble High Court of Rajasthan in Union of India Vs. Aditya Cement STO 2008 Raj 19 upholding the Tribunal's order that service recipient in India was liable to service tax from 1.1.2005 was distinguished on the ground that Aditya Cement received services in India from its service provider.(Para 4).

    Stay granted.

  • STO 2009 CESTAT 1289
  • Service Tax : Waiver of penalty u/s 76,77: The assesses were aware of their liability to pay service tax as they had been paying tax for the previous period. No argument has been raised either before the adjudicating authority or the lower appellate authority that penalty should be set aside by extending the protection under Section 80 of the Finance Act, 1994.(Para 2).

    Appeal rejected.

  • STO 2009 CESTAT 1292
  • Service Tax: Waiver of penalty u/s 76,78: Although before the Commissioner (Appeals), the challenge was under Section 76 and 78 of the Act the lower appellate authority has applied the provision of Section 80 of the Finance Act only to set aside the penalty imposed under Section 76 by accepting the assessee's contention that there was reasonable cause for failure to pay the service tax. He has not recorded any finding on the argument that penalty under Section 78 is also required to be set aside. The impugned order is set aside and case remitted for fresh adjudication on the issue as to whether penalty imposed under Section 78 of the Finance Act is required to be set aside by application of the provisions of Section 80.(Para 2).

    Appeal allowed by way of remand.

  • STO 2009 CESTAT 1392
  • Service Tax: Cable Operator Services during January 2003 to March 2005: Waiver of interest and penalties: There is no finding of suppression of fact, willful misstatement, fraud etc. with intent to evade payment of tax by the respondents substantiated with any evidentiary material in the orders of the lower authorities. In the absence of any such findings failure to pay tax due on time has to be held to have occasioned by the ignorance of the statutory requirements on the part of the respondents. In the circumstances, sufficient cause existed in these cases and that they are entitled to the relief of waiver of penalty under Section 80 of the Act. Penalties waived.(Para 5).

    Interest: As regards liability to interest already paid by the respondents, in terms of relevant Section 75 of the Act, the respondents are liable to pay interest for the delay in payment of service tax.(Para 6).

    Appeal partially allowed.

  • STO 2009 CESTAT 1312
  • Service Tax: Waiver of penalty u/s 76: The Original Authority imposed penalty under Section 76 and 78 of the Act. The Commissioner (Appeals) set aside the penalty under Section 76 of the Act on the ground that the penalties under Section 76 and 78 of the Act cannot be imposed simultaneously. In this regard, Hon'ble Kerala High Court in the case of Asstt. Commissioner of Central Excise Vs. Krishna Poduval reported in STO 2005 Ker 16 held that there is no bar to impose penalty in both the Sections. Matter need re-consideration(Para 2,3)

    Appeal allowed by way of remand.

  • STO 2009 CESTAT 1320
  • Service Tax: Simultaneous imposition of penalty u/s 76 and 78: The respondents contended that as per amendment of Section 78 by Sr. No. 90 of Finance Act, 2008 (18 to 2008), if the penalty is payable under Section 78, the provision of Section 76 shall not apply. The matter is required to be examined in the light of the decision of the Hon'ble Kerala High Court in the case of Asst. Commissioner of Central Excise vs. Krishna Poduval, reported in 2006 (10) STR 185 (Ker.) and the amendment of Section 78 as contended by the Respondents.(Para 3,4).

    Revenue appeal allowed by way of remand.

  • STO 2009 CESTAT 1141
  • Service Tax: Commission Agent, under the category of Business Auxiliary Services: Notification No. 13/2003and Notification 25/2004 dated 10.9.2004: During the relevant period there was confusion in the field which led to non payment of Service Tax. It is well settled law that extended period is available to the Revenue only when the assessee is indulging in suppression or mis-statement of any facts with intent to evade payment of dues. There is nothing in the present appeal to reflect upon the appellant's malafide. In any case, the appellants have accepted their duty liability and have paid the same along with interest. As such, it is a fit case to invoke Section 80 of Finance Act, 1994 and extend the benefit to the appellants. Accordingly, penalties imposed are set aside. Demand of Tax and interest stands confirmed as not contested.(Para 6).

    Appeal disposed off.

  • STO 2009 CESTAT 1142
  • Service Tax: Waiver of penalty imposed for belated payment of tax: It is not a case of new levy, in which case, the appellant can be said to be not aware of the same. Admittedly the appellant is a registered service tax assessee and knew about his legal obligations to pay the tax. No justification for non payment of tax during the relevant period is coming forth from the appellant. As such, Section 80 cannot be extended against them.(Para 2).

    Pre-deposit ordered.

  • STO 2009 CESTAT 1350
  • Service Tax: Receipt of commission by authorized dealer of Maruti Udyog Ltd for providing bank loans through Maruti Finance: Liability: There was a doubt regarding levy of tax on such services. The Central Board of Excise & Customs vide Circular No.87/05/2006-S.T., dated 6.11.2006 clarified that the tax is leviable on such service. In the identical situation, the Tribunal set aside the penalties in the following decisions:- (a) Modern Machinery Store Vs. CCE, Jaipur-I STO 2008 CESTAT 964 (b) Raj Auto Centre Vs. CCE, Ahmedabad-II STO 2008 CESTAT 579 (c) Vipul Motors (P) Ltd. Vs. CCE, Jaipur-I  STO 2007 CESTAT 1307. The appellants are not contesting the payment of tax along with interest, which they have already deposited long before issue of show cause notice. In view of that, penalties are not sustainable. (Para 3,7).

    Appeal allowed.

  • STO 2009 CESTAT 1156
  • Service Tax: Business Auxiliary Service: Activity of rendering the services to the banks/financial institutions on commission basis in relation to the services provided by such financial institutions: Scope: Penalty: The activity was under doubt in the entire trade as to whether they are covered by Business Auxiliary Service or not. The department was approached for seeking clarification, as a result of which the circular was issued on 06.11.06 being Circular No.87/5/2006/ST clarified that such service provided by the appellant would be covered under the category of Business Auxiliary Service. Appellants submits that they have, in fact, deposited the entire service tax before issuance of said circular. Commissioner (Appeals) has already remanded the matter for re-quantification of duty amount against the appellant by extending the benefit of Notification No.25/2004-ST dt.10.09.04, the penalty issue can be decided afresh by adjudicating authority in de-novo proceedings.(Para 2,3).

    Matter remanded.

  • STO 2009 CESTAT 1500
  • Service Tax: Repair and maintenance service: Liability: Waiver of penalties u/s 76,77,78: The appellant had accepted the confirmation of demand of Service Tax and has discharged the Service Tax liability along with interest.

    As regards the penalty imposed under Section 76, appellants are liable to be penalized as they have not filed the returns nor they have discharged the Service Tax liability for the period from 16.6.2005 to 31.3.2006. Hence, the penalty imposed under Section 76 is upheld.(Para 5.1).

    As regards the penalty imposed under Section 77, Service Tax returns had to be filed by the appellant. As they have accepted the Service Tax liability for the period 16.6.2005 to 31.3.2006, the penalty imposed under Section 77 is also liable to imposed on the appellant and the same is upheld.(Para 5.2).

    As regards the penalty imposed under Section 78, the learned Commissioner (A) in his first order dated 27.3.2007 had set aside the demand of Service Tax for the period 1.7.2003 to 15.6.2005 coming to a conclusion that there was no suppression of facts, fraud, misstatement or collusion, as there was a correspondence between the appellant and the Superintendent/Authorities. On a specific query from the Bench, the appellant submits that there was no appeal filed by the revenue against this Commissioner (A)'s order dated 27.3.2007. It would indicate that the said order attained finality and hence, there cannot be any demand prior to 16.6.2005. The provisions of Section 78 can be invoked only when there is suppression of facts, fraud, collusion or misstatement or contravention of any provisions with an intent to evade payment of Service Tax. In this case, all these ingredients were found absent hence provisions of Section 78 cannot be invoked for imposition of equivalent penalty on the appellant.(Para 5.3).

    Appeal disposed off.

  • STO 2009 CESTAT 1172
  • Service Tax: Cleaning Services, Maintenance & Repair Services, Cargo Handling Service and Manpower Supply Services: Penalty u/s 78: Cleaning services maintenance as well as repair services for the period prior to 16.6.05 shall not be exigible to service tax. He has sustained the service tax demand in respect of Industrial Construction Services for the period 10.9.04 onwards. The penalty payable under Section 78 should be reduced keeping in view the quantum of service tax payable. He has not ruled out suppression of facts by the appellant. However, there is no quantification of the penalty payable under Section 78 in the appellate order. Simultaneously penalty cannot be levied under Sections 76 & 78 of the Finance Act, 1994. Therefore, he waived the penalty under Section 76 of the Act.(Para 4,5).

    Revenue appeal dismissed.
     

  • STO 2009 CESTAT 954
  • Service Tax: Construction services: Activities like civil works of foundation for drilling rig, platform hardening, approach roads etc. for the period 2004-2005 to 2006-2007: Scope and liability: The appellants have deposited full amount of service tax demanded and are challenging portion of the demand on the ground that the appellant is not a commercial concern and therefore tax was not leviable prior to 16.06.05 and are also contesting the penalty. They have a good case for the period prior to 16.06.05 and being an individual proprietor and not conversant with the nuances law and also in view of the changes made in the law regarding the definition of commercial concern etc., consequent to which the appellant became liable to Service Tax and service tax was not paid and appellant had no intention to evade payment of service tax. They have a strong case for leniency under Section 80 of Finance Act, 1994. Pre-deposit waived (Para 1,2).

    Stay granted.

  • STO 2009 CESTAT 1169
  • Service Tax: Maintenance and repair service: Penalty: Section 80 of the Finance Act, 1994 provides that, "notwithstanding anything contained in the provisions of Section 76, Section 77 or Section 78, no penalty shall be imposable on the assessee for any failure referred to in the said provisions, if the assessee proves that there was reasonable cause for the said failure." In the present case, the respondent was providing services to M/s. Goodlass Nerolac Paints Ltd. and raised the bills from time to time. They have maintained proper records of the transactions. Proprietor of the respondent firm in response to the summons immediately appeared and disclosed the entire transactions as recorded in the Bill Book, Bank Statement, etc. They have also paid the tax with interest. After looking into the conduct and facts and circumstances of the case, the respondent proved that there was a reasonable cause for the said failure. Therefore, the Commissioner (Appeals) rightly set aside the penalties.(Para 3,4).

    Revenue appeal rejected.
     

  • STO 2009 CESTAT 1221
  • Service Tax: Services of Multi System Operator (MSO) / Cable operator, ‘Internet Advertisement Service': Penalty u/s 78: There is a clear finding by the Original authority that there is no malafide intention to, evade tax. This point has been appreciated by the Commissioner (Appeals) in setting aside the penalty under Section 78 of the Finance Act, 1994. There is no infirmity in the decision of, the Commissioner (Appeals).(Para 4). 

  • STO 2009 CESTAT 1163
  • Service Tax: Consulting engineers service: Non-speaking order: Remand: A demand of nearly Rs 48 lakhs should have been dealt with in a better manner. This is not at all a speaking order. The contentions made by the appellants should have been gone through in depth and on each point a proper finding ought to have been given. Moreover there is no finding with regard to the invocation of extended period. In these circumstances, the impugned order has no merit at all. Consequently the same is set aside and matter remanded to the Original Authority for passing a denovo order(Para 6) 

    Appeal disposed of by way of remand.
     

  • STO 2009 CESTAT 804
  • Service Tax: Waiver of pre-deposit and Stay: A strong prima facie case for waiver of pre-deposit has been made out by the applicants in the light of the judgment of the Hon'ble apex court in Sunrise Associates Vs Govt. of NCT of Delhi & Ors. (2006) 5 Supreme Court cases 603, which has been followed by the Hon'ble Sikkim High Court in Martin Lottery Agencies Ltd. Vs. Union of India STO 2007 Sikkim 361, holding that lottery tickets are not goods liable to sales tax but are actionable claims. The High Court has set aside the service tax demand.

    Stay allowed.

  • STO 2009 CESTAT 805
  • Service Tax: Application for COD and stay on recovery of Penalty: The application for condonation of delay of 242 days in filing the above appeal is allowed as the delay was due to counsel being under the wrong impression that the letter seeking recovery of the amount confirmed under the present impugned order was in respect of Order against which the appeal had already been preferred. Pre-deposit is waived as the tax amount stands paid together with interest. (Para 1).

    Stay granted.

  • STO 2009 CESTAT 1470
  • Service Tax: Mandap Keeper Services', ‘Health &.Fitness Services’ and ‘Convention Services': Show cause notice issued to the appellant by Reviewing Authority under Section 84 of the Finance Act, 1994 for imposition of penalty under Section 76, 77 and 78 of the Finance Act, 1994: The appellant had not discharged the Service Tax liability during the period April 1998 to December 2004, on the consideration received by them for renting out their lawn and open terrace to their members. It is also undisputed that the appellant had discharged the entire Service Tax liability and interest thereof before the issuance of show cause notice on this issue. The Adjudicating Authority considered all these aspects and refrained from imposing any penalties under Section 76, 77 and 78 of the Finance Act, 1994 on the appellants. The reviewing authority has not considered these facts in his review order. Board's Circular No. 137/167/2006-CX-4, dated 3.10.2007 is very clear and categorical on this issue. Board has very clearly held that once an amount to the Service Tax and the interest thereof stands deposited or paid by the assessee, it is a conclusion that all the proceedings against such person is concluded and this will also be in respect of sub section 3 of Section 73.(Para 5.1).

    Appeal allowed.

  • STO 2009 CESTAT 1234
  • Service Tax: Cable Operator Services: Penalty and interest: Commissioner(Appeals) has set aside the penalties imposed on the respondent and the interest u/s 75 by invoking the inherent powers u/s 80 of the Finance Act, 1994. Respondents have been claiming before the adjudicating authority that they were ignorant of the Act that link operators have to pay Service Tax and have to maintain books of accounts, that the non-maintenance of books of accounts was due to ignorance of the law, regarding the payment of Service Tax and not on deliberate intention. The adjudicating authority has imposed penalties without giving findings as regards the reasoning’s put forth by the respondent before him for non-payment of Service Tax dues to ignorance of law. Commissioner(Appeals) has considered this fact. The respondents are situated in Kundapura, which is one of the rural area of the Karnataka State. It is possible that the respondent may not be aware of the provisions of the law as known to the urban people in the state. In view of this, provisions of Section 80 can be invoked for setting aside the penalties imposed on the respondents. Accordingly, the impugned order to the extent it sets aside the penalties u/s 76, 77 8, 78 is upheld as being legal and proper. As regards the interest amount that has been set aside by the Commissioner(Appeals), which is payable on the amount which escaped tax. The interest liability has to be fastened upon the respondent for non-payment of the Service Tax dues in time. Accordingly that portion of the impugned order which sets aside the interest liability on the respondent is liable to be set aside.(Para 5,6,7).

    Revenue appeal partially allowed.

  • STO 2009 CESTAT 869
  • Service Tax: Mandap keepers service during the period April 1999 to September 2002: Penalty u/s 76,77,78: In the case of UOI & Ors. vs. Dharmendra Textile Processors & Ors. STO 2009 SC 1620, the Hon'ble Supreme Court held that penalty under Section 11AC of the Central Excise Act was mandatory. Following this ruling, the Court, in the case of Monarch Pipes Ltd., set aside the Tribunal's order [CEO 2006 CESTAT 55], wherein it had been held that penalty under Section 11AC of the Central Excise Act was not imposable where the assessee had already paid duty before issuance of the show-cause notice. The final legal position is, therefore, that any penalty otherwise imposable under Section 11AC of the Act cannot be avoided on the ground that the duty amount was paid by the assessee prior to issuance of show-cause notice. This principle is applicable to the penalty under Section 78 of the Finance Act, 1994 inasmuch as both these provisions of law (Section 11AC of the Central Excise Act and Section 78 of the Finance Act, 1994) deal with penal liability of an assessee who has failed to discharge tax liability in comparable circumstances. However, the above principle can not be applied to the penalties under Section 76 and 77 of the Finance Act, 1994. Insofar as those penalties are concerned, some of the decisions are found to be operating in favour of the appellant. In the case of Sieger Spintech Equipments Pvt. Ltd. vs. CCE, Coimbatore STO 2006 CESTAT 735 the appellants had paid service tax before the issue of show-cause notice and, therefore, penalties imposed on them under Sections 76 and 77 were set aside. The penalty imposed under Section 76 of the Finance Act on the assessee was set aside in identical circumstances in the case of Warna Industries Ltd. vs. CCE, Pune STO 2006 CESTAT 845. A similar penalty was set aside in the case of Heera Metals Ltd. vs. CST, Kolkata STO 2006 CESTAT 437. Therefore, penalty u/s 76,77 are waived and penalty u/s 78 sustained.(Para 2).

    Appeal disposed off.

  • STO 2009 CESTAT 1007
  • Service Tax: Waiver of penalties u/s 76,77,78: The undisputed facts are that appellant is liable to discharge the Service Tax on the service of "Manpower Recruitment Services & Commercial Training and Coaching Services". It is also undisputed that they had collected the Service Tax for the period January 2006 to 17.04.2006 and did not deposit the amount, in time, as provided in the law. It is also not disputed that appellant has discharged the entire Service Tax liability with interest. The challenge of the appellant in this appeal is only against the imposition of penalties under Section 76, 77 and 78 of the Finance Act, 1994.

    The provision of Section 76 are attracted and upheld in this case as it is undisputed that appellant had collected the Service Tax for the period January 2006 to April 2006 but not deposited the same with the Government treasury.

    Penalty imposed under Section 77, it is also justified and upheld as appellant has not filed the ST-3 Returns as mandated.

    As regards the penalty under Section 78 of the Finance Act, 1994, there is no allegation in the show cause notice, regarding suppression willful misstatement fraud or collusion with intent to evade payment of Service Tax. In the absence of any such allegations, no penalty can be imposed under this Section. Further, the Adjudicating Authority has confirmed the demand under Section 73 (1) of the Finance Act, 1994, which in itself does not attract provisions of Section 78 of the Finance Act, 1994 for imposing penalty. The ratio laid down by Hon'ble Supreme Court in the case of (i) Aban Loyd Chiles Offshore Ltd. Vs. CC - STO 2006 SC 1262 (ii) Pahwa Chemicals Pvt. Ltd. Vs. CCE - STO 2005 SC 760 (iii) CCE Vs. HMM Ltd. - STO 1995 SC 21 covers the issue in favour of the appellant.(Para 5, 5.1 to 4).

    Appeal disposed off.

  • STO 2009 CESTAT 979
  • Service Tax: Waiver of penalty: The issue is linked with the Order-in-Original wherein no penalty was imposed under Section 76 of the Finance Act, 1994 by Adjudicating Authority. In the impugned order the Commissioner has passed another adjudication order imposing penalty, in respect of the same offence which is totally not in accordance with law. On perusal of the records, the applicants have made out a prima facie case for the waiver of the pre-deposit of the penalty imposed in the impugned order.(Para 5).

    Stay allowed.

  • STO 2009 CESTAT 697
  • Service Tax: Business Auxiliary Services: Commission: Bonafide belief of no liability of Service Tax: Penalty: This a case deserving relief of penalty under Section 78 by exercising powers of Section 80. Penalty imposed under Section 78 of Finance Act, 1994 is set aside. (para 3)

  • STO 2009 CESTAT 839
  • Service Tax: Waiver of penalties under Section 76, 77 and 78: Appellant is a self supporting woman entrepreneur working in a rural area and was not aware of Service Tax provisions. She also failed to collect Service Tax amount from the service user and had discharged tax and Interest liability out of her own pocket. This is a deserving case for invocation of Section 80 for waiving penalties imposed.(Para 3).

    Revenue appeal rejected.

  • STO 2009 CESTAT 661
  • Service Tax: Revisional order for levy of penalty: Waiver of pre-deposit: Scope: This Revisional proceeding is in view of escapement of levy of penalty by the original authority for no rhyme or reason. There is no any infirmity in the revisional order. However, considering that this appellant has already been considered by the Tribunal for waiver of pre-deposit by order dated 12.09.08, hence there shall not be deposit of penalty imposed under Section 76-77 of the Finance Act, 1994 by Revisional order during pendency of the appeal.(Para 3.2)

    Stay allowed.

  • STO 2009 CESTAT 743
  • Service Tax: Waiver of pre-deposit of penalty: Applicants have already paid service tax together with interest, which is a sufficient compliance with the provisions of Section 35F of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994.(Para 3).

    Stay allowed.

  • STO 2009 CESTAT 717
  • Service Tax: Technical Testing & Analysis Services’ during the period 01.07.2003 to 30.06.06: Waiver of pre-deposit: The Commissioner (Appeals) reduced the penalty imposed under Section 76 and Section 78 or the Act. The appellants paid tax due before the department initiated proceedings to recover the same. Pre-deposit of penalty waived.(Para 1).

    Stay allowed.

  • STO 2009 CESTAT 527
  • Larger period: Management, Maintenance and Repair Service: Respondent received a show cause notice for the period from April 2003 to December 2005: Earlier a show cause notice dated 21/02/07 had also been issued to the Respondent for demanding the service tax in respect of the same services for the period from January 2006 to September 2006 within normal limitation period: Larger period not available for subsequent show cause notice.

  • STO 2009 CESTAT 432
  • Commercial Training or Coaching Services: The centre in question render the same service as regular colleges affiliated to the University. Taxing them for the service was discriminatory and against article 14 of the Constitution when the same service rendered by regular affiliated colleges were kept outside the levy. The centre in the parallel stream deserve the same patronage of the state as the regular colleges. They cater to an important need of the citizen to receive higher education which the state is not able to provide. Taxing them amounts to discrimination if the regular colleges are commercial training or coaching centre like the appellants.

    Bonafide belief: the view taken by the Hon’ble High Court of Kerala against liability of colleges in the parallel stream lends adequate support to the claim of bonafide belief held by the centre.

  • STO 2009 CESTAT 272
  • Service Tax: Rent a cab scheme operator: Willful suppression to invoke larger period: The appellant was ignorant of the legal provisions. M/s. BSNL also had not advised of the service tax liability nor paid the tax when informed about the demand from the Department. The show-cause notice had not alleged willful misstatement or suppression of facts. The appellant had not wilfully suppressed any fact from the Department. The failure to fulfill the statutory obligations had occurred owing to his ignorance. The lower authorities have found the service tax of Rs.9,080/- payable by the appellant as he had wilfully suppressed the fact of rendering taxable service, however there is nothing on record to substantiate the above finding. The claim that such an allegation had not been made in the show-cause notice is also not contested. Demand not sustainable (Para 1,3)

    Appeal allowed.

  • STO 2009 CESTAT 331
  • Service Tax: Commission of sales: Scope and liability: Out of amounts paid to the appellant, substantial amounts have been paid to the partners as salary and commission. However, these cannot lead to a conclusion that the payment is for a different purposes. To make such an allegation or to come to such a conclusion, investigation should have been conducted. None of the dealers have been contacted by the investigating officers to find out whether the services as envisaged in the agreement were rendered by appellant or not and also whether any other services were rendered by them. This appears to be a case of missed opportunities. The veracity of agreement produced before the lower authorities cannot be suspected especially in the absence of evidence to the contrary. The issue to be decided is whether appellants have rendered the services of advertising agency to KBPL. It is not disputed that actual work of painting on the walls / advertisements were undertaken by various parties to whom appellant have paid the amount as mentioned earlier. No evidence have been relied upon to hold that appellant have conceived, designed, prepared the advertisements in question. The amounts paid to appellant have been accounted under the category of advertisement and sales promotion expenses by KBPL. A portion of the sum so received was spent on advertisement by appellant. These facts alone cannot lead to an inference that appellant have rendered the services as advertising agency and the entire amount of about Rs.9 crores received from KBPL has to be treated as representing payment for rendering advertising services. In the schedule Q to the balance sheet relating to the head "other expenses", there is a ‘note' which clarifies as under:- "Commission on sales amounting to Rs. 1,19,77,790.27/- paid to M/s. Harmeet Kandhari & Associates, belonging to a relative of the directors of the company, has been clubbed with the Advertisement & Sales Promotion expenses." Similar clarifications appear in the balance sheets for the other years as well. Whether commission of sales could be treated as advertisement and sales promotion expenses is a debatable point. However, this is not an issue to be decided. It suffices to say that the terms of the agreement produced and the entries in the balance sheets of manufacturing company and those of M/s. H.K. Associates support the claim by the appellant. The balance sheet of M/s. H.K. Associates also mentions these amounts only as commission on sales. In view of the above, there is merit in the appeal of the appellant i.e. M/s. H.K. Associates(Para 6,7,8).

    Appeal allowed.

  • STO 2009 CESTAT 591
  • Demand: Stay: even at the stage of investigation, the appellants had discharged the service tax liability along with interest: Pre deposit waived.

  • STO 2009 CESTAT 333
  • Photography Service: Revision order enhancing penalty: No penalty imposable as the issue was debatable whether cost of material to be included in the cost.

  • STO 2009 CESTAT 321
  • Stay: Appeal against Revision Order: Tax, interest and penalty imposed by original authority already deposited: Waiver granted from balance amounts confirmed by Revision Order.

  • STO 2009 CESTAT 305
  • Service Tax: Banking and other financial services: Activity of installed a system called Magnetic Ink Character Recognition (MICR) which was utilized for clearing of cheques: Penalty: As a public sector undertaking they had no intention whatsoever in evading service tax and immediately after clarification received from the Board they promptly paid the service tax. As the Commissioner (appeals) has already waived penalty under Section 78, on the very same ground the penalties under Section 75A, 77 & 76 should also be waived. On this issue on the liability to service tax RBI gave an opinion dated 29.10.2004 to the effect that such operations are not taxable. However, C.B.E.C. who, after consulting the Ministry of Law, issued a clarification dated 25.2.2005 stating that the same is liable to service tax under the head "Banking and other financial services." In the facts and circumstances mentioned above, there is sufficient cause on the part of the appellant in failure to pay the service tax and, accordingly, provisions of Section 80 is rightly invokable. Penalties waived.(Para 6,7).

    Appeals disposed off.

  • STO 2009 CESTAT 241
  • Service Tax: Receivers of services from abroad: Scope and liability: The charging Section 66A was introduced w.e.f. 18.04.2006. The demand relates to a prior period. Hence, they are not liable to pay the Service Tax during the said period. This Bench, in the case of Prabhat K. Tyagi Vs. CCE, Bangalore - 2008- TIOL-678-CESTAT-BANG has taken a view that for the period prior to 18.04.2006, no service Tax would be leviable on the recipient for services received from abroad. In the said decision, even the Board's Circular dated 08.10.2001 has been relied on. Prima facie, the appellants have a strong case on merits.(Para 6).

    Stay granted

  • STO 2009 CESTAT 239
  • Service Tax: Waiver of pre-deposit: Since the entire amount of Service Tax and the interest thereon stands deposited with the authorities, pre-deposit of the amount of penalties imposed by the learned Commissioner as a Reviewing Authority stand waived.(Para 4).

    Stay granted.

  • STO 2009 CESTAT 248
  • Processing of MICR Cheques: When the departmental authorities pointed out their liability, they discharged the Service Tax for the entire period along with interest even long before the issue of Show Cause Notice. The Service Tax was paid on 31.03.2005 and the Show Cause Notice was issued on 29.08.2006. Full waiver of the penalties imposed till the disposal of the appeal. (para 4)

  • STO 2009 CESTAT 246
  • Service Tax: Security services: Demand: Scope and liability: Appellant was under the bonafide impression that Service Tax need not be paid on the salary portion of the gross receipts and other statutory dues. Further, he stated that the department has demanded Service Tax on certain activities such as house keeping, parking, etc., which would not come within the purview of Security Services. He also pleaded financial hardship. In any case, he also stated that some amount out of the total demand has already been paid. The exact liability can be decided only at the time of final hearing. The appellant appears to have paid Service Tax in respect of certain receipts and in respect of the others, it is seen that he had not discharged the liability. (Para 2,5).

    Pre-deposit ordered.

  • STO 2009 CESTAT 387
  • Service Tax: ‘Security Agency Service' for the period from 2000-01 to May 2004: Penalties: Financial constraints cannot be an excuse for not discharging the service tax liability. Therefore total waiver of penalties in the present case is not called for. The impugned order is modified to the extent of reducing penalty under Section 78, sustaining penalty under Section 77 and waiving penalty under Section 76(Para 3).

    Appeal partially allowed.

  • STO 2009 CESTAT 121
  • Service Tax: Courier services, during the period April 2001 to March 2005: Penalty u/s 76,78: Under Sec.76 of the Finance Act, 1994 a minimum penalty of Rs.200/- per day, subject to maximum of the amount of service tax evaded has been provided for. The respondents have not brought out any genuine reasons for not depositing the tax with the Government, even when the same was collected from their Customers and the period is quite long i.e. four years. Therefore, no case for reducing the penalty has been made out. Commissioner (Appeals) has not commented upon the penalty imposed under Sec.78 and therefore the same is not being commented upon. Thus, Commissioner (Appeals) has reduced the penalty from the minimum imposable which is incorrect, the order-in-original is restored and commissioner (Appeals) order is set aside. (Para 5,6).

    Revenue appeal allowed.

  • STO 2009 CESTAT 99
  • Service Tax: Stay application for recovery of the amount set aside/reduced: Scope: The Commissioner (Appeals) upheld the demand of service tax and interest but reduced the penalty to 25% of the amount imposed under Section 78 and set aside the penalty imposed under Section 76 altogether. By the stay petition, the Department seeks to recover the amount set aside/reduced by the Commissioner (Appeals). Such a relief cannot be granted in an interim order.(Para 2).

    Stay petition rejected.

  • STO 2009 CESTAT 103
  • Service Tax: Cargo Handling Service: Amount received as compensation from the contractors/custodian: Liability: Penalty u/s 76,77,78: The amount had been received from the contractors/custodian and not from the clients is not in dispute, As per the Department interpretation, this amount has to be treated as amount received for taxable service provided by the respondent to their clients as and when the respondent received this amount as compensation from the contractors/custodian for failure to perform certain jobs, those jobs had been performed by them. However, the Respondent's contention is that there was confusion as to whether this amount would attract service tax or not and for this reason only they did not pay the service tax on this amount. In view of this, waiver of penalty in terms of the provisions of Section 80 of the Finance Act,1994 should have been considered by the lower authority but there are no findings on this point in the impugned order. Waiver of penalty cannot be granted just because the service tax had been paid prior to the issue of show cause notice. But if the non-payment of service tax was due to some bonafinde reason on the part of the assessee and the assessee on being pointed out paid the service tax, the waiver of penalty under Section 76,77 or 78 would be merited. But since the question as to whether in view of the facts of the case, waiver of penalty under Section 80 is warranted, has not been considered in the impugned order, the impugned order is set aside and the matter is remanded(Para 3).

    Appeal disposed off.

  • STO 2008 CESTAT 564
  • Service Tax: Penalty: The appellant had obtained service tax registration, and service tax for January 2005 to December 2005 was not paid by the due date and the same was paid only in January 2006. No reason has been given by the appellant for non-payment of service tax by the due date during January - December 2005 period and similarly no reason has been given as to why ST-3 returns for the period ending 31st March 2005 and the period ending 30th September 2005 respectively were not filed. In view of this, there is no infirmity in the impugned order.(Para 4).

    Appeal dismissed.

  • STO 2009 CESTAT 140
  • Service Tax: Port Services: Penalties u/s 75,76,78: Waiver of pre-deposit: Appellant invited our attention to the Stay Order wherein similar issue was dealt with and stay of recovery of the amounts demanded was issued. The demands relates to Service Tax on various amounts received by the appellants from the one who had entered into an agreement with the appellants to render certain services. As this issue had been dealt with in the earlier Stay Order cited supra, full waiver of pre-deposit granted(Para 2).

    Stay granted.

  • STO 2008 CESTAT 539
  • Service Tax: Cable operator service: Enhanced penalty in review proceedings u/s 84: Appellants are liable to pay penalty under Section 76 in view of the delay of 3203 days in payment of tax. Further, Section 76 does not give any discretion and discretionary power can be exercised only under Section 80. In this case appellants have failed to show that they are entitled to the benefits of Section 80. Therefore, the penalty under Section 76 of the Finance Act, 1994 is upheld. In view of the Hon’ble Supreme Court judgment with regard to Section 11AC of Central Excise Act, which is similar to Section 78 under Finance Act, 1994, penalty under Section 78 is mandatory unless duty, interest and penalty to the extent of 25% have been paid. [UOI v. M/s. Dharamendra Textile Processors reported in CEO 2008 SC 174. Therefore penalty under Section 78 is also mandatory and appellants have not made out a case for exercise of discretionary power under Section 80 of Finance Act, 1994. 25% of penalty to be paid if payment made within 30 days of communication of order (Para 3.1, 3.2).

    Appeal disposed off.
     

  • STO 2009 CESTAT 134
  • Service Tax: Waiver of penalties imposed under Section 75A, 76,77,78 :

    Penalty U/S 75A: The service tax along with interest has already been deposited during the period 1999 and 2000. Therefore the penalty imposed under Section 75 (a) of the Finance Act is not imposable as the said provision has come into statute on 16.7.2001.

    Penalty u/s 76: With regard to the penalty of Rs. 100/- per day for not depositing the service tax, the assessee held bona fide, belief pertaining to the category in which their services to be classified. Hence this penalty is also set aside. The matter was agitated and the Tribunal had, remanded the matter for de novo consideration. In de novo, the earlier demand of Rs. 4.8 lakhs has been reduced by the Original authority to Rs. 7,200/-. Therefore their bona fide belief has been established. In such circumstances, the Original authority has got powers not to impose penalty. Therefore the imposition of penalty under Section 76 of the Act for non-payment of service tax is required to be set aside in the light of the Tribunal ruling rendered in the case of M/s Majestic Mobikes Pvt. Ltd. & Ors. [Final Order Nos. 652 - 672/2008 dated 30.5.2008]. The Tribunal has examined this very issue in cases where Commissioner had imposed very high penalty and in cases where the Original authority thought fit to drop the proceedings. The Tribunal noted the Board's Circular also to set aside the penalty. On this ground also assessee has established their bona fide belief in not depositing the service tax. From the fact that the Original authority had reduced the tax to Rs. 7,200/- from Rs. 4.80 lakhs, it shows that the assessee had made up a strong case for setting aside the penalty imposed in the matter. Therefore the penalty of Rs. 100/- per day under Section 76 during which failure continued for non-payment of tax is set aside.

    Penalty u/s 77: In so far as the penalty of Rs. 1000/- under Section 77 is concerned, this penalty is upheld since it is a failure on the assessee's part to follow the procedures.

    Penalty u/s 78: In so far as the penalty under Section 78 is concerned, there is no suppression of facts or value of taxable service. Further, in order to impose penalty under Section 78, the Original authority was required to obtain permission from the Commissioner of Service Tax in terms of Section 78, but no such permission has been obtained. There was no intention to evade payment of service tax nor any suppression of facts. Hence the penalty u/s 78 is set aside.(Para 4).

    Appeal disposed off.

  • STO 2009 CESTAT 143
  • Demand: Stay: GTA: BAS: BSS: Appellants engaged in the transportation of chassis of commercial vehicles from factories of M/s. Tata Motors Limited to their Regional Sales Offices for further sales: Department classified the activity under BAS: Directions issued for pre deposit.

  • STO 2009 CESTAT 50
  • Service Tax: Maintenance and repair' service rendered during the period 16.6.2005 to 31.8.05: Retreading of old tyres : Liability: The appellants are eligible for exemption in terms of Notification No.12/03 - ST dated 20.6.03 if it produced documentary proof for having sold material to its clients in the course of rendering 'maintenance and repair' service. The assessee is also assessed to Sales Tax and has paid re-sale sale tax for the vulcanizing solution and tread rubber used for rebuilding tyres of its customers during the material period. The assessee is eligible for abatement from taxable value equal to the resale value of the material which had been used in retreading tyres and on which it paid sales tax. The original authority shall allow the benefit of the Notification subject to the assessee furnishing evidence for having sold the inputs used in retreading lyres. The appellants are also eligible for getting the taxable value re-quantified considering the total proceeds as inclusive of service tax it has to pay for the service in terms of Section 67 (2) of the Act. Matter remanded(Para 6,7).

    Appeal allowed by way of remand.

  • STO 2008 CESTAT 531
  • Erection, Commissioning & Installation Service: Works Contract Service: Sub-contractor demanded service tax: Appeal of main contractor for the same demand pending: Stay granted.

  • STO 2008 CESTAT 549
  • Service Tax: Demand: Waiver of pre-deposit: Duty alongwith interest has been paid on receipt of show cause notice and there is a finding by the adjudicating authority that there is no suppression on the part of the applicant(Para 2).

    Pre-deposit waived, stay allowed

  • STO 2009 CESTAT 36
  • Service Tax: Business auxiliary services: commission paid to the commission agent: Penalties u/s 76,77,78: The appellants in the present appeal have already paid the entire Service Tax demanded along with interest, in view of the fact that they would in a position to avail the cenvat credit. Original Authority had dropped the proceedings accepting the appellant's contention that they would be liable for payment of Service Tax only with effect from 16.6.2005. There would not be liability in respect of services rendered abroad prior to this date. As the issue is purely a question of interpretation, the imposition of penalties is unjustified.(Para 6).

    Appeal allowed.

  • STO 2008 CESTAT 527
  • Service Tax: Service tax on the ‘overriding commission’: Scope: This Bench disposed of similar case earlier vide Final order No.452/07 dt. 20.4.07 in the case of M/s.ETA Travel Agency Pvt. Ltd. And Final Order No. 698/07 dt. 12.6.07 in the case of M/s. Translanka Air Travels Pvt. Ltd. and that the Hon’ble High Court has stayed the operation of both the final order in appeals filed by the said parties.(Para 1,2).

    Stay granted.

  • STO 2009 CESTAT 35
  • Revision Order: Penalty: When the appellants had already paid entire service tax and interest before issuance of show cause notice, no need to revise the Order dispensing with imposition of penalties under 76, 77 & imposing only minor penalty under Section 78: Penalties set aside.

  • STO 2009 CESTAT 34
  • Service Tax: Penalties and interest: Liability: The issue is squarely covered by the decision of this Tribunal in the case of M/s. Majestic Mobikes Pvt. Ltd. & Ors. Vs. CCE vide Final Order No.652-672/2008 dated 30.5.2008 wherein it was held that when the Service Tax liability has been discharged before the issue of show cause notice, then penalties under Section 76, 77 and 78 are not justified. Consequently, the dropping of penalties is legal and proper. However, assessee has to pay-the interest to that extent. The impugned order is not correct to the extent of dropping the interest. Therefore, the impugned order is modified accordingly(Para 5).

    Revenue appeal disposed off.

  • STO 2009 CESTAT 19
  • Service Tax: Security Agency's Services: Interest and personal penalty u/s 81: The fact remains that the major amount has been paid by the appellant before the issue of show cause notice and it is also seen that the appellants have moved the High Court for filing writ petition against the defaulting companies. Even the Original authority did not choose to impose any penalty under Sections 75, 76 & 77. Further the appellant has stated that they have questioned the valuation of the Service Tax in the Kerala High Court for inclusion of certain amounts and the decision is still pending. In view of all these factors, the penalty of Rs. 10,000/- is not justified. Therefore the penalty is set aside. However, interest has to be paid in accordance with law. This Tribunal in various decisions has held that the interest is liable to be paid. (Para 5).

    Appeal disposed off.

  • STO 2008 CESTAT 907
  • Service Tax: Pandal and Shamiyana Contractor Service: Delayed payment of tax: Penalty u/s 76: Appellant in their Agreement with the Police Authorities, mentioned that Service Tax is payable. They have received the payment in respect of their service excluding service tax, which was paid by the Police Authorities in the month of March, 2006. They deposited the tax on 31.03.2006. The liability of payment of tax is on the Appellant. There is no dispute that the Appellant was well aware of the payment of tax. It is also noted that in the month of April, 2005, the Additional Commissioner of Central Excise informed them to pay the tax, but they have not paid the same as the Police authorities had not released the amount of tax. Appellants took one year for payment of tax. In view of that, imposition of penalty is justified. The imposition of penalty of equal amount of tax is not justified. The Tribunal in the case of J.K. D. Popat & Co. Vs. CCE, Nashik reported in 2008 (85) RLT 117 (CESTAT-MUM.) held that imposition of penalty under Section 76 is not mandatory. It is noted that the Appellant deposited the tax with interest before issue of show cause notice and delay in payment was caused due to delay in payment of tax by the Police Authorities. Penalty reduced(Para 4).

    Appeal disposed off.

  • STO 2009 CESTAT 441
  • Service Tax: Waiver of pre-deposit of dues: The appellants have paid substantial service tax amount promptly before the issue of show-cause notice by the Department, hence the pre-deposit stand waived(Para 1).

    Stay granted.

  • STO 2008 CESTAT 909
  • Service Tax: Rent a Cab Scheme Operator: Delay in payment of tax: Penalty u/s 75,76,77,78: Appellant had no malafide intention in not depositing service tax in time. They were ignorant about the provisions of Service tax and even the company of the status of M/s BSNL, Fatehpur neither informed the appellants about the service tax leviable on the amount paid to the appellants for the services of under Rent-a-Cab Scheme nor their contract contained any clause regarding service tax. The appellant has paid the service tax for the period March, 2003 to February 2004 alongwith interest after they came to know about their service tax obligation. Therefore, there was reasonable cause for failure to pay service tax and file returns. Hence the benefit of section 80 of the Finance Act, 1984 is applicable to them. Penalties waived.(Para 6,8).

    Revenue appeals rejected.

  • STO 2008 CESTAT 911
  • Service Tax: GTA services during the period 1.1.2005 to 31.3.2006: Demand: Section 78 of the Act provides penalty for suppressing value of taxable service. The Commissioner (Appeals) observed that the delay in deposit of service tax does not appear to be intentional or deliberate, in the case of appellants, who are a Government of Himachal Pradesh undertaking. It is noted that the appellants deposited the service tax before issue of show cause notice. It is also noticed that the appellant is a State Government undertaking and they had no knowledge for levy of tax. The Revenue failed to produce any material that the appellants failed to pay the tax by reason of fraud, collusion, etc. So, in the facts and circumstances of the case, Section 78 of the Act cannot be invoked.(Para 2).

    Appeal allowed

  • STO 2009 CESTAT 442
  • Consultancy Service: Appellants directed to produce the Death Certificate pertaining to Sri B.E.GELB and the licence or other document (by whatever name it is called) issued by the governmental authority in the US to Sri Bruce E.GELB or M/s. B.E.GELB Consulting Services, both the documents having to be duly authenticated by the Indian Embassy in the US. This shall be done within 3 months.

  • STO 2008 CESTAT 421
  • Service Tax: Cargo Handling service: Movement of limestone in unpacked condition within mining area: Scope: In this case, the movement of limestone in unpacked condition is entirely within the mining area and the same cannot be considered to be cargo handling. It is also supported by decisions of this Tribunal viz. Sainik Mining & Allied Services Ltd. v. Commissioner of Central Excise [STO 2007 CESTAT 1260], Commissioner of Central Excise v. B.K. Thakkar [STO 2007 CESTAT 1032] etc. From 1-6-2007, the appellants are paying Service tax on the above activities in the category of “mining services”, which were introduced for the purpose of the levy with effect from the said date. The activities recognised today as ‘mining activities’ could not have been treated as cargo handling for the prior period. The Board’s circular No. 232/2/2006-Cx.4 dated 12-11-2007 prima facie cannot be held to have laid down the legal position correctly to the extent it is contradictory to the view taken by the Tribunal. (Para1,2).

    Stay application allowed.

  • STO 2009 CESTAT 165
  • Demand: Stay: Reimbirsible expenses: whatever franking charges, they have collected from their customers was paid to the postal authorities and thus qualified for reimbursement: Documents even though permitted by adjudicating authority, appellants could not produce at that time: Appellants in possession of documents: Matter remanded.

  • STO 2008 CESTAT 916
  • Service Tax : Service Tax on Clearing and Forwarding Agents received during 16.7.97 to 16.10.98 : Demand : The Show Cause Notice to recover the service tax was issued much beyond the period of six months from the 12.5.2000 (date when the Finance Act received assent of President) allowed in the Finance Act, 2000. Therefore, the demand confirmed by the original authority was on a time barred Show Cause Notice. Moreover, the Show Cause Notice. Moreover, the Shoe Cause Notice. Moreover, the Show Cause Notice had invoked Section 73 which could not be validly invoked to demand tax due on C & F Agents’ service for which returns had to be filed under Section 71A of the Act as held by Apex Court in the case of CCE, Meerut Vs. L.H. Sugar Factories Ltd. & Others. (Para 3,4).

    Revenue appeal dismissed.

  • STO 2008 CESTAT 430
  • Service Tax: Waiver of predeposit and stay: Duty was demanded by invoking the extended period of limitation under Section 73(1) ibid. This duty liability, stands finalised against the party, who failed to get clearance from the CoD for contesting the demand of duty. Prima facie, the penalty imposed on them under Section 78 of the Act is irresistible, inasmuch as the ground raised by the lower authorities for imposing the penalty is no different from the ground raised by them for invoking the larger period of limitation to demand duty.(Para 2).

    Partial pre-deposit ordered.

  • STO 2009 CESTAT 160
  • Service Tax: Management consultancy service: Penalties u/s 76,77,78: Scope and liability: The crux which is to be seen, is whether any advice has been rendered by one organization or person to another organization for improving the organization by conceptualizing, devising, development, upgradation of the receiving organization. The answer is a definite YES. The definition of ‘management consultant' is also very clear and wide. It envisages providing any service in any manner and providing service in a group or calling several clients together is no impediment in getting covered under the definition of the Management Consultancy. The appellants' representatives/experts do not carry out the function of simply overlooking or supervising the deliberations but, in fact, act as guides or path finders for the Iicensee companies. Therefore, it cannot be said that the appeIIants are functioning merely as platform providers to the licensee companies. M/s RPG have provided the licensee companies the services with a view to improve the structure of their organization to bring about better efficiency. M/s. CEAT Ltd have received advice, consultancy from M/s RPG in the field of organization efficiency, 'Corporate Financing System' and because of modification rectification of the system, their credit rating with banks, financial institutions and other lending agencies has improved and interest cost has come down. M/s CEAT Ltd have admitted that due to the technical assistance and advice of M/s RPG, their Management Information System (MIS) and Inventory Management System have improved and the same has resulted in considerable savings to M/s CEAT. Similarly, M/s CEAT have admitted that they have benefited by advice and technical assistance from M/s RPG relating to development, improvement/ modification of Strategic Planning System Forex Management and HRD and have benefited financially. M/s RPG send them Regular Forex Advisory Circulars also. This clearly shows that M/s RPG’s advice consultancy and assistance are directly in connection with the management of the recipient companies in regard to devising, development, upgradation, modification etc of their working system. Therefore, the services rendered by M/s RPG are in the nature of management consultancy.(Para 10,11).

    Principle of Mutuality are not applicable to the facts of the present case because: (a) M/s RPG have entered into Non-Exclusive Licensing Agreements with other companies e.g. M/s CEAT Ltd. Both the contracting parties viz M/s RPG and M/s CEAT Ltd etc are two independent legal entities and independent registered companies under the Companies Act. (b) The relation between two contracting companies is not of Principal and Agent, which was present in the case of Chermsford Club, Dalhousie Institute, Saturday Club etc. Here the Licensing Contractors were entered into and the relationship is client-consultant relationship. (c) It does not fulfil the three conditions enumerated in para 14 of the Chermsford Club decision (extracted above) inasmuch as the identify of fund contributors and the recipients of the fund is not the same. (Para 12).

    There is an agreement between the service provider M/s RPG and the service availer M/s CEAT Ltd and others for the Management Consultancy or agreement with an advertiser. The reading of the definition of Management Consultancy Service, Terms of Agreement and Income Tax Return of M/s CEAT Ltd etc clearly revel that the Service Tax is recoverable from the appellants.(Para 13).

    Cum-tax value: Since the Service Tax law provides for payment of service tax on the gross amount charged, the appellant's pIea that the gross amount recovered should be considered as inclusive of service tax is not tenabIe and is not accepted. The Explanation 2 added to Section 67 of the Finance Act, 1994 with effect from 10.9.2004 cannot be applied retrospectively.(Para 14).

    Penalties: The appellants have not been able to prove that there was reasonable cause for the failure referred to in Section 76, Section 77 and Section 78 of the Finance Act, 1994. Hence, the penalties have been rightly imposed on the appellants under the aforesaid Sections of the Finance Act, 1944.(Para 17).

    Appeal rejected.

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