2010 (8) TMI 396 - AT - Service Tax

SSI - Exempted from taxation in terms of Notification No. 06/2005-S.T. dt. 1-3-05 - Total income exceeded Rs. 4 lakhs and as such appellant was liable to pay the service tax on the extra income - Demand service tax along with interest and imposition of penalty u/s 76, 77 and 78 - The appellants were aware of the fact that taxable income beyond Rs. 4 lakhs is taxable to service tax inasmuch as they were earlier registered with the department and aware of the law - That is how they surrendered their licence by submitting that their taxable income is within the range of Rs. 4 lakhs which fact has been found to be incorrect - Hence liable to pay service tax - Set aside the penalty under Section 77 - The demand of duty and interest along with imposition of penalties under Sections 76 and 78 are upheld.

Summary

Issues:
1. Appellant's liability to pay service tax on extra income.
2. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.

Analysis:
1. The appellant, engaged in providing taxable services as a Practising Chartered Accountant, surrendered their registration with the Service Tax department after declaring their income below the taxable threshold. Subsequent investigations revealed their income exceeded the threshold, leading to a demand for service tax, interest, and penalties. The Assistant Commissioner confirmed the demand and imposed penalties under Sections 76 and 78 for suppressing correct income information. The appellant contested penalties under Sections 76 and 77, invoking Section 80 for bona fide belief. However, authorities rejected the plea, citing the appellant's awareness of tax laws and duty to disclose accurate income. The Tribunal upheld the demand, interest, and penalties under Sections 76 and 78, dismissing the appellant's argument for invoking Section 80.

2. The Tribunal addressed the penalty imposed under Section 77 of the Finance Act, 1994, which pertains to contraventions of rules and provisions without specified penalties. Considering the penalties under Sections 76 and 78 already imposed for the contraventions, the Tribunal found separate penalty under Section 77 unnecessary. Consequently, the Tribunal set aside the penalty under Section 77 while upholding the demand, interest, and penalties under Sections 76 and 78. The appeal was disposed of accordingly, with the judgment pronounced on 26-8-2010.