2010 (8) TMI 474 - AT - Service Tax

Penalty under sections 76 77 and 78 - The issue involved in the case would be of an academic interest - Not recording any findings as for period post-1-6-2007 appellant himself has registered as provider of mining services - It is also to be noted that the appellant herein had himself got registered under the category of site formation and clearance services on 27-3-2006 - Hence the learned Counsel urging that the services will not fall under the category would be no consequence - The impugned order to the extent it is confirming demand of the service tax and the interest thereon is upheld - There was genuine doubts as regards the service tax liability in the mind of the service receiver and the service provider - By invoking the provisions of section 80 of the Finance Act 1994 we set aside the penalties imposed by the adjudicating authority under sections 76 77 and 78 of the Finance Act 1994. - The appeal is disposed of accordingly.

Issues Involved:
1. Classification of Services
2. Service Tax Liability
3. Imposition of Penalties
4. Invocation of Section 80 of the Finance Act, 1994

Issue-wise Detailed Analysis:

1. Classification of Services:
The appellant argued that their activities, including blast-hole drilling, blasting, excavation, loading, transport, spreading, and dumping, should not fall under the category of 'site formation and clearance, excavation and earth moving and demolition service.' They contended that their activities were incidental to mining and should be classified under 'mining services,' which were taxable from 1-6-2007. The adjudicating authority, however, concluded that the services provided by the appellant fell under 'site formation and clearances, excavation, earthmoving and demolition services,' based on the CBEC Circular dated 12-11-2007.

2. Service Tax Liability:
The appellant was registered under 'site formation and clearance service' from 27-3-2006 and had disputes with M/s. Western Coalfields Ltd. (a Government of India Undertaking) regarding the discharge of service tax liability. Western Coalfields Ltd. had directed the appellant to keep the service tax payments pending until a decision from the CBEC was received. The appellant discharged the entire service tax liability by 29-11-2006 after receiving directions from Western Coalfields Ltd. on 15-9-2006 to pay the service tax "under protest."

3. Imposition of Penalties:
The adjudicating authority imposed penalties under sections 76, 77, and 78 of the Finance Act, 1994, on the appellant for not paying the service tax on time. The appellant argued that they had no intention to evade the service tax liability and that the delay was due to the directions from Western Coalfields Ltd., which was taking up the issue with the CBEC.

4. Invocation of Section 80 of the Finance Act, 1994:
The Tribunal found that the appellant had a reasonable cause for the delay in discharging the service tax liability. The directions from Western Coalfields Ltd., a Government of India Undertaking, to keep the service tax payments pending until a decision from the CBEC was received, constituted a reasonable cause. The Tribunal invoked the provisions of section 80 of the Finance Act, 1994, which allows for the waiver of penalties if a reasonable cause is shown. The Tribunal set aside the penalties imposed under sections 76, 77, and 78 of the Finance Act, 1994.

Conclusion:
The Tribunal upheld the demand for service tax and interest but set aside the penalties imposed under sections 76, 77, and 78 of the Finance Act, 1994, by invoking section 80 of the Finance Act, 1994, due to the reasonable cause shown by the appellant. The appeal was disposed of accordingly.

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