2010 (8) TMI 195 - AT - Service Tax

Appellant is a proprietorship concern engaged in providing services under the category of erection, commissioning and installation - service became liable to service tax with effect from 1-7-03 and appellant submitted an application for registration on 26-10-04 - After obtaining registration appellant paid the service tax voluntarily with interest for the period from 1-7-03 to 26-10-04 and filed the required ST-3 returns on 11-5-05 - Held that - appellant has obtained the registration, paid the service tax with interest and therefore it cannot be said that there was an intention to evade service tax and therefore the appellant indulged in suppression of facts or misdeclaration - appeal is allowed

Summary

Issues:
1. Liability of service tax for services provided under the category of erection, commissioning, and installation.
2. Application for registration and payment of service tax voluntarily.
3. Imposition of penalty under various sections of Finance Act, 1994.
4. Challenge regarding the liability of service tax and waiver of penalties.

Analysis:
1. The appellant, a proprietorship concern providing services under the category of erection, commissioning, and installation, became liable to service tax starting from 1-7-03. The appellant applied for registration on 26-10-04 and paid the service tax voluntarily with interest for the period from 1-7-03 to 26-10-04. Subsequently, proceedings were initiated against the appellant, resulting in the confirmation of the service tax with interest already paid and the imposition of penalties under the Finance Act, 1994.

2. The advocate representing the appellant argued that the appellant, an individual engaged in trading solar energy systems and installation, applied for registration and paid the tax voluntarily upon becoming aware of the liability. Despite the possibility of challenging the service tax liability and seeking a refund, the appellant did not contest the liability but requested a waiver of penalties. The circular issued by the Board was cited to support the exemption of commissioning or installation services provided by an individual.

3. On the other hand, the Departmental Representative contended that since the appellant was providing services under the name of a business entity, Star Energy Systems, it could not be considered as services provided by an individual. The imposition of service tax and penalties was argued to be justified in this context.

4. The Tribunal considered the arguments presented by both sides and concluded that the appellant, being a proprietorship concern, could not be separated from the individual proprietor. Therefore, the contention that the individual should be treated as a commercial concern was rejected. The Tribunal found the advocate's arguments regarding the non-imposition of penalties to be valid. Despite the opportunity to challenge the service tax liability, the appellant did not seek a refund and voluntarily complied with registration and tax payment. This demonstrated a lack of intention to evade taxes or engage in misdeclaration. Consequently, the Tribunal invoked Section 80 of the Finance Act, 1994, to waive the penalties imposed on the appellant, allowing the appeal and setting aside the penalties.

This detailed analysis of the judgment highlights the key issues of liability, voluntary compliance, penalty imposition, and the Tribunal's decision to waive penalties based on the circumstances presented during the proceedings.