2010 (8) TMI 191 - AT - Service Tax

Penalty under provisions of Section 76, 77 and 78 of the Finance Act, 1994 - contention of the assessees is that there was no intention to evade payment of duty - activity of sale of SIM card - eligible to exemption available to sale of goods under Notification No. 13/2003 - Held that - assessees are not correct in contending that they had not received any amount as it is an admitted position that a meager amount of commission was received, the other argument that in the light of the Tribunal s order cited supra - set aside the penalties under Section 76 and 78 by holding that reasonable cause has been made out in terms of Section 80 of the Finance Act, 1994 - Appeal is partly allowed

Summary

Issues: Challenge to service tax demand upheld; Challenge to penalties under Sections 76, 77, and 78 of the Finance Act, 1994.

Analysis:
1. Service Tax Demand Challenge: The assessees did not contest the service tax demand, which was upheld by the Tribunal.

2. Penalties Imposition Challenge: The assessees challenged the imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The contention was that there was no intention to evade payment of duty, citing a case where their activity was deemed eligible for exemption under Notification No. 13/2003-S.T. The assessees claimed the benefit under Section 80 of the Finance Act, 1994, arguing that there was no intention to evade payment of duty. They also argued that they believed they had not received commission, as the payment was in the form of a book adjustment, and thus, they were not liable to pay service tax.

3. Judgment on Penalties: The Tribunal considered the submissions from both sides. While acknowledging that the assessees had received a meager amount of commission, it accepted the argument that the question of liability to pay service tax was a matter of interpretation based on a previous Tribunal order. Consequently, the Tribunal set aside the penalties under Sections 76 and 78, citing reasonable cause under Section 80 of the Finance Act, 1994. However, the penalty under Section 77 was upheld. The appeal was partly allowed, with penalties under Sections 76 and 78 being set aside, and the penalty under Section 77 being upheld.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by the parties, and the Tribunal's decision regarding the challenges to the service tax demand and the imposition of penalties under various sections of the Finance Act, 1994.