2007 (1) TMI 566 - AT - Central Excise

Summary

Issues involved:
The issue involved in this case is whether the appellants are liable to pay service tax for providing Business Auxiliary Service without registration and following statutory formalities, and whether penalties imposed under Section 76, 77, and 78 of the Finance Act, 1994 are justified.

Summary:

Issue 1: Liability for service tax and penalties
The appellants, M/s. Busy Bee, provided Business Auxiliary Service to M/s. BPL Cellular Ltd. and M/s. ICICI Bank without registering themselves or paying service tax for the period 1-6-2004 to 31-3-2005. The Deputy Commissioner of Central Excise imposed a demand for service tax and penalties under Section 76, 77, and 78 of the Finance Act, 1994. The Commissioner (Appeals) found that the appellants had no mala fide intention to evade payment of service tax and set aside the penalty under Section 78. The appellants sought a stay application to waive pre-deposit and stay recovery of penal liabilities.

Issue 2: Consideration of penalties under Section 80 of the Finance Act, 1994
The appellants had paid part of the tax before the Show Cause Notice and the balance tax and interest before adjudication. They had registered as a Service tax assessee earlier for a different service and paid service tax, indicating their bona fide conduct. The lower appellate authority found that the short payment of tax was not intentional. The Tribunal noted the appellants' ignorance of legal provisions and their reasonable cause for the failures. Section 80 of the Finance Act, 1994 provides for waiving penalties if there was a reasonable cause for the failure. The Tribunal decided to waive the penalties against the appellants under Section 80, setting aside the impugned order and allowing the appeal.

(Order dictated and pronounced in open Court)