2005 (11) TMI 488 - AT - Service Tax

Summary

Issues: Challenge to imposition of penalty for non-filing of ST-3 returns, dispute over levy of service tax for letting out auditorium for prayers, challenge to correct calculation of service tax.

Analysis:

1. Challenge to Imposition of Penalty for Non-filing of ST-3 Returns:
The appellant, a charitable religious organization, contested the penalty of &8377; 5,407/- and an additional penalty of &8377; 1,000/- for not filing ST-3 returns. They argued that they were engaged in community services and had leased the auditorium for religious activities, not for marriages typically associated with a "mantapam." Citing the judgment in Hindustan Steel Ltd. v. State of Orissa, they claimed a bonafide belief that they were not covered under the category of "mantapam." The Commissioner upheld the penalty, but the Tribunal found that the levy of penalty was unjustified based on the bonafide belief held by the appellants. The matter was remitted back to the Original Authority for further consideration, emphasizing the religious nature of the activities conducted in the auditorium.

2. Dispute Over Levy of Service Tax for Letting Out Auditorium for Prayers:
The appellant also challenged the levy of service tax for letting out the auditorium for prayers, arguing that it did not fall under the category of "mantapam." The Tribunal observed that the activity was purely religious and not social or cultural, warranting a reevaluation by the Original Authority. The Tribunal set aside the penalties imposed, emphasizing the need for a correct determination of whether the activity of letting the auditorium for prayers fell within the scope of "mantapam." The matter was referred back to the Original Authority for a fresh assessment, stressing the importance of following principles of natural justice.

3. Challenge to Correct Calculation of Service Tax:
The appellant disputed the correct calculation of service tax, highlighting that the show cause notice lacked clarity on the demanded amount and alleged a lack of proper calculation by the authorities. The Tribunal agreed that the calculation of service tax was not adequately addressed and directed the Original Authority to reexamine both the issue of activity classification and the accurate calculation of service tax. The penalties imposed were set aside, and the adjudicating authority was instructed to resolve the matter promptly within a specified timeframe to ensure procedural fairness.