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Issues:
Appeal against setting aside of service tax and penalty by Commissioner (Appeals). Analysis: The appeal was directed against the Order-in-appeal dated 27-10-2004 where the Commissioner (Appeals) set aside the Order-in-Original that imposed service tax and penalty on the respondent. The respondent, registered as a service tax payer under Rent A Cab service category, issued a bill for a specific amount for renting a cab, on which service tax liability was found unpaid by the department. The respondent paid the service tax liability along with interest, but penalty was imposed. The appellate authority quashed the penalty and set aside the service tax demand, leading to the current appeal. The department's appeal was solely based on the fact that the penalty imposed on the respondent was set aside by the Commissioner (Appeals), despite the respondent admitting and paying the tax liability along with interest. The Commissioner (Appeals) justified the decision by referring to various appellate decisions and a Voluntary Disclosure Scheme under the Board's Circular dated 23-9-2004. The Commissioner highlighted that leniency could be shown to new assessees due to procedural delays in compliance with the Service Tax Law, and in this case, where the respondent had registered on time and paid the tax along with interest, penalties could be waived as they were procedural in nature. The Tribunal found the Commissioner (Appeals)'s reasoning in line with established law and the Board's Circular, leading to the dismissal of the department's appeal. The judgment emphasized that the respondent, who had complied with the law by registering on time and paying the tax promptly, should not be denied the benefit of penalty waiver, especially when new assessees were granted leniency under special schemes. The appeal was therefore dismissed, upholding the decision to set aside the penalty and service tax demand.
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