2007 (3) TMI 765 - AT - Service Tax

Summary

Issues involved: Dispute regarding liability to pay service tax by a photo lab and photo studio, imposition of penalties under section 76 and section 78 of the Finance Act.

In the judgment delivered by the Appellate Tribunal CESTAT, Mumbai, it was noted that the three appeals under consideration all stemmed from the same impugned order passed by the Commissioner (Appeals) and involved an identical issue. The appellants, who were the owners of a photo lab and photo studio, were made liable to pay service tax starting from 16-7-2001. The confusion regarding whether the photographer or the photo lab was responsible for paying the tax led to a delay in tax deposition, which was eventually rectified in December 2003 along with the payment of interest. Subsequently, penalties were imposed under section 76 and section 78 of the Finance Act by the original adjudicating authority, a decision that was upheld by the Commissioner (Appeals).

The appellant did not dispute the duty liability and argued that since they had already paid the duty along with interest and 25% of the penalty amount imposed under section 78, the remaining penalties under section 76 should be set aside. Considering the confusion prevailing in the industry during the initial periods of service tax levy and the fact that the duty had been paid along with interest, the Tribunal agreed to set aside the balance penalties imposed on all three appellants. Therefore, the appeals were disposed of in favor of the appellants with the balance penalties under section 76 being waived.