2010 (7) TMI 310 - AT - Service Tax

Provider of telecommunication service as telegraph authority - no service tax was paid to the treasury - Demand for Service Tax and penalty - authority also found that the appellant was charging service tax from the customers - Appellate authority held that the appellant shall fall under first proviso to Section 4 of Indian Telegraph Act, 1885 and shall be liable to pay service tax - Held that - no evidence before him to notice that there were less than 300 lines provided by the appellant - appellant s claim that it has provided less than 300 lines was discarded and providing of 500 lines was upheld - appellants claimed that the record for the subsequent period was burnt and no FIR was filed in that respect - appellant failed to explain its matter before the appellate authority - Appeal dismissed

Summary

Issues: Failure to appear before adjudicating authority, liability of service tax on telecommunication service, quantification of demand, penalties imposed, recovery of charges from customers, appeal against adjudication, liability to pay service tax on provided lines, suppression of facts, absence of appellant during proceedings.

In this case, the appellant failed to appear before the adjudicating authority to prove their stand, leading to a de novo hearing where it was concluded that there was a liability of service tax for providing telecommunication service as a telegraph authority. The authority referred to the Indian Telegraph Act, 1985, adopted by the Finance Act, 1994, and proceeded with quantifying the demand as no service tax evidence was provided by the appellant. Consequently, service tax amounts were demanded for specific periods, along with interest and various penalties under different sections of the Act. The authority also noted that the appellant was charging service tax from customers, making the collected charges recoverable under Section 11D of the Central Excise Act, 1944.

Upon appeal, the appellant argued that they had fewer clients than the licensed capacity of 300 lines, suggesting that no service tax should be levied on 300 lines. However, the appellate authority held that the appellant fell under the first proviso to Section 4 of the Indian Telegraph Act, 1885, and was liable to pay service tax as taxable service was provided. The appellant's claim of providing less than 300 lines was rejected, and the authority upheld the provision of 500 lines due to lack of evidence supporting the appellant's assertions. The appellant's failure to provide evidence of capacity utilization, coupled with questionable conduct and absence during proceedings, led to the dismissal of the appeal for lacking merit.

The absence of the appellant in various proceedings since 2008, coupled with a lack of effort to prosecute the appeal, indicated a casual approach and an abuse of the legal process. The tribunal, noting the appellant's consistent absence and lack of merit in the appeal, dismissed the case accordingly, emphasizing the importance of active participation and adherence to legal proceedings for a fair and just outcome.