2013 (10) TMI 1324 - AT - Service Tax

Penalty u/s 78 - services of Architect - Held that - The appellant is a registered Architect with the Indian Council of Architecture under the Architects Act, 1972. These facts are not in dispute. The appellant is also associated with the Civil Contractor who are undertaking various civil contracts of the Government. In these circumstances, we find no merit in the contention of the appellant that he has only undertaken the services in the form of liaison work and back office services that were rendered to the contractors. In view of the above we find no infirmity in the impugned demand with regard to the duty and interest. - However, penalty is reduced - Decided partly in favour of assessee.

Summary

Issues: Appeal against demand of Service Tax for architectural services, applicability of penalty under Section 78 of the Finance Act, 1994.

Analysis:
1. Service Tax Demand: The appellant contested the demand of Service Tax amounting to &8377; 37,205/- along with interest and a penalty of &8377; 74,410/- imposed under Section 78 of the Finance Act, 1994. The Revenue's case was based on the appellant's Income Tax Return showing receipts for architectural consultancy, despite not being registered as a service provider. The adjudicating authority upheld the demand, which was later reduced by the Commissioner (Appeals) to the same amount of &8377; 37,205/-. The appellant argued that the services provided were not architectural consultancy but rather liaison and back-office services for civil contractors engaged in government projects. However, the Tribunal found that the appellant, a registered architect with the Indian Council of Architecture, was indeed providing architectural services as defined under Section 65(6) of the Finance Act, 1994. Therefore, the demand for Service Tax was upheld.

2. Penalty under Section 78: The appellant challenged the imposition of a penalty under Section 78 of the Finance Act, 1994, arguing that since the Service Tax amount along with interest had already been paid, the penalty was harsh. The Tribunal acknowledged the appellant's contention and reduced the penalty amount from &8377; 74,410/- to &8377; 37,205/-, aligning it with the Service Tax demand. The Tribunal upheld the impugned order, emphasizing that the appellant's association with civil contractors engaged in government projects constituted the provision of architectural services, justifying the penalty under Section 78. The Tribunal found no infirmity in the demand for duty and interest, ultimately confirming the reduced penalty amount while upholding the rest of the order.