2013 (8) TMI 883 - AT - Service Tax

Penalty u/s 76, 77 and 78 - Exemption under Notification No. 59/98-S.T. - Held that - appellants are not challenging the Service Tax liability but only challenging the imposition of penalties. We find as per the provisions of Section 80 of the Finance Act, 1994 which provides notwithstanding anything contained in Sections 76, 77 and 78 no penalty shall be imposable on the assessee for any failure referred to in said provisions, if the assessee proves that there was reasonable cause for the said failure. As per the provisions of Notification No. 59/98-S.T., dated 16-10-1998 the activity undertaken by practicing Chartered Accountant other than covered under the Notification are exempted from tax. The appellant produced a copy of the sample invoice whereby the amount is collected for the services rendered on Central Excise matters from M/s. Dover India Pvt. Ltd. In these circumstances, particularly taking into consideration as Mr. Sridhar Hegde now expired, we find that it is not a case for imposition of penalty, in view of the provisions Section 80 of the Finance Act, 1994. The penalties imposed under Sections 76 and 78 of the Finance Act, 1994 are set aside. - Appeal disposed of.

Issues:
- Appeal against the impugned order passed by the Commissioner (Appeals) regarding Service Tax liability and penalties under Sections 76 and 78 of the Finance Act, 1994.
- Applicability of Section 65(83) of the Finance Act, 1994 to services rendered by a Chartered Accountant.
- Exemption under Notification No. 59/98-S.T. for certain services provided by Chartered Accountants.
- Challenge to penalties imposed on the appellant.
- Interpretation of Section 80 of the Finance Act, 1994 regarding reasonable cause for failure and exemption from penalties.

Analysis:
1. The appellant, a Chartered Accountant, filed an appeal against the order of the adjudicating authority confirming a Service Tax demand of Rs. 10,610/- for services provided to M/s. Dover India Pvt. Ltd. The Commissioner (Appeals) dismissed the appeal, leading to the current appeal before the Appellate Tribunal.

2. The appellant contended that the services in question were not provided by the Chartered Accountant but by other professionals, such as an advocate. Additionally, the appellant argued that certain services rendered were not covered under Section 65(83) of the Finance Act, 1994, citing Notification No. 59/98-S.T. as amended.

3. The appellant sought protection under Section 80 of the Finance Act, 1994, claiming a reasonable belief that the activities undertaken were not taxable under Section 65(83). The appellant presented invoices and argued that the demand was for services exempted under the Notification.

4. The Revenue, however, maintained that the appellant, as a Chartered Accountant firm, provided services to clients and was thus liable for penalties. The lower authority's findings were relied upon, emphasizing the lack of evidence supporting the appellant's contentions.

5. The Appellate Tribunal noted that the appellant did not dispute the Service Tax liability but challenged only the imposition of penalties. Considering Section 80 of the Finance Act, 1994, which exempts penalties if there was a reasonable cause for the failure, the Tribunal found in favor of the appellant. Given the circumstances, including the demise of the individual running the firm, penalties under Sections 76 and 78 were set aside.

6. The appeal was disposed of with the penalties being revoked based on the provisions of Section 80 and the exemption under Notification No. 59/98-S.T. The Tribunal concluded that there was no case for penalty imposition in this situation, given the reasonable cause for the failure to comply with certain provisions of the Finance Act, 1994.

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