2004 (5) TMI 3 - AT - Service Tax

Service Tax Courier Service Appellant under a bona fide belief that they are not covered under definition of courier and service tax being a new concept (1) Meaning of Courier (2) Penalty

Summary

Issues:
- Applicability of penalty under Section 77 of the Service Tax Act for failure to furnish prescribed Returns.
- Interpretation of the definition of Courier under the Service Tax Act.
- Consideration of bona fide belief as a defense against penalty imposition.
- Analysis of Section 80 of the Service Tax Act regarding penalty imposition for failure referred in Sections 76 to 79.

Analysis:
The appellants contested the imposition of a penalty under Section 77 of the Service Tax Act for their failure to furnish the prescribed Returns, arguing that they believed they were not covered under the definition of Courier as per the Act. They explained that their operations did not constitute door-to-door transportation, as they received goods in one office and transported them to other offices for customer collection. Relying on Section 80 of the Service Tax Act, which exempts penalty imposition if a reasonable cause is proven for the failure, the appellants asserted that they had a bona fide belief in their non-liability for filing Returns.

The Revenue, however, maintained that the appellants were indeed a Courier Agency and were obligated to pay Service tax, accusing them of intentionally delaying the filing of necessary Returns within the stipulated timeframe. The appellants countered this argument by emphasizing their consistent filing of Returns without any delays. The Tribunal acknowledged the complexity of the situation, recognizing that the concept of Service tax was relatively new and that the Courier services fell under its provisions.

Ultimately, the Tribunal sided with the appellants, finding merit in their argument that there was a reasonable cause for their failure to file the necessary Returns within the specified period. Considering the provisions of Section 80 of the Service Tax Act, which shields assesses from penalty if a reasonable cause is demonstrated for the failure, the Tribunal deemed the penalty imposition unsustainable and subsequently set it aside, allowing the appeals filed by the appellants.