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Issues involved: Service tax liability on packaging activity; Imposition of penalty u/s 78 of the Finance Act, 1994.
The judgment by the Appellate Tribunal CESTAT, Kolkata dealt with the service tax liability of an appellant company for packaging refractory bricks obtained from M/s. Tata Refractories, which the department classified as 'Cargo Handling Services' subject to service tax. The lower adjudicating authority confirmed the service tax amount of Rs. 21,16,226 and imposed a penalty of Rs. 10,000. This decision was upheld by the Commissioner (Appeals) on 30-9-2004. The appellant had approached the Tribunal against this confirmation, and the Tribunal had stayed the operation of the Commissioner's order. However, the jurisdictional Commissioner, u/s 84 of the Finance Act, 1984, reviewed the penalty imposed and increased it to Rs. 21,16,226, equal to the service tax amount, as per section 78 of the Finance Act, 1994. The appellant's counsel argued for a stay on the penalty amount demanded in the impugned order, citing the Tribunal's earlier Stay Order requiring a pre-deposit of service tax and a penalty of Rs. 10,000. Upon careful consideration, the Tribunal decided to waive the pre-deposit of penalty in the impugned order until the disposal of the appeal.
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