2008 (12) TMI 668 - AT - Service Tax

Summary

Issues:
Penalties under Sections 76, 77, and 78 of the Finance Act, 1994 imposed on the appellants for non-discharge of Service Tax liability under the category of 'Business Auxiliary Services' for the period from 16-6-2005 to 31-12-2005.

Analysis:

1. Penalties Imposed by Commissioner:
The Commissioner of Central Excise & Customs, Belgaum, passed an Order-in-Revision imposing penalties on the appellants under Sections 76, 77, and 78 of the Finance Act, 1994. The penalties amounted to Rs. 1,48,238/-, Rs. 1,000/-, and Rs. 3,56,460/- respectively. The Commissioner contended that the appellants were liable for these penalties despite the appellants having discharged the Service Tax liability and interest even before the issuance of the Show Cause Notice.

2. Appellants' Argument:
The appellants, engaged in mining activities, argued that during the relevant period, they were not obligated to discharge any Service Tax liability as their activities only became taxable from 1-6-2008. The appellants emphasized that the penalties imposed were unjustified given the circumstances of the case.

3. Tribunal's Decision:
Upon careful consideration, the Tribunal found merit in the appellants' argument. The Tribunal noted that the appellants had indeed paid the Service Tax liability along with interest before the Show Cause Notice was issued. Citing precedents, the Tribunal highlighted that when taxes are paid before the issuance of a Show Cause Notice, imposing harsh penalties under Sections 76, 77, and 78 is unwarranted. Consequently, the Tribunal ordered a complete waiver of the pre-deposit of the dues demanded in the impugned Order-in-Revision until the appeal's disposal. The Tribunal further directed that no coercive measures should be taken until the appeal is decided, granting a stay application. The appeal was scheduled for hearing on 17th March 2009.

4. Conclusion:
The Tribunal's decision to waive the pre-deposit of penalties and stay any coercive measures until the appeal's resolution favored the appellants. By considering the appellants' timely payment of taxes and relevant case laws, the Tribunal ensured a fair and just outcome in this matter, providing relief to the appellants against the penalties imposed by the Commissioner.