2006 (5) TMI 523 - AT - Service Tax

Summary

Issues:
1. Payment of service tax on the gross value of services charged.
2. Applicability of penalties under Sections 75, 76, and 78 of the Finance Act, 1994.

Analysis:
1. The case revolved around the payment of service tax on the gross value of services charged by the appellant, who was providing photographic services. The appellant had deducted the value of consumables and paid service tax on the net value, which led to the Revenue initiating action for short payment of service tax amounting to Rs. 1,66,431/-, along with interest under Section 75 of the Finance Act. Additionally, penalties under Sections 76 and 78 of the Finance Act were imposed. The appellant conceded the liability for the short payment, acknowledging that the service tax should have been paid on the gross billing as per Section 67 of the Finance Act.

2. During the proceedings, the appellant's advocate argued that the notification exempting the value of consumables from gross billing was issued at a later date, and therefore, requested a waiver of penalties due to the lack of intention to evade service tax and a genuine misinterpretation of legal provisions. The Revenue, represented by the JDR, reiterated the findings of the lower authorities. Upon careful review of the case records, the Tribunal found that the appellant had already paid a portion of the outstanding amount and was liable to pay the balance along with interest. Regarding the penalty under Section 78, the Tribunal noted the absence of mala fide intention and attributed the short payment to a misinterpretation of legal provisions, leading to the decision to set aside the penalty. However, the penalty under Section 76 was deemed reasonable and upheld.

In conclusion, the Tribunal disposed of the stay application and appeal by confirming the liability for the short payment of service tax, directing the appellant to pay the outstanding amount with interest, setting aside the penalty under Section 78 due to the absence of mala fide intention, and upholding the penalty under Section 76 as reasonable.