2010 (11) TMI 255 - AT - Service Tax

Search - Scrutiny - Evasion of duty - Demand u/s 11D - Collection in the name of service tax - the plea of the appellant regarding the amounts that they have shown in invoices as Service Tax was never recovered from the customers adduced evidence in form of ledger accounts from books of account, was not correctly appreciated by the Adjudicating Authority - Decided in the favour of the assessee Regarding Tour Operator s services - vehicles which were utilized by the appellant herein were not shown by the revenue as tourist vehicles as defined under section 2(43) of the Motor Vehicle Act - In the absence of any contrary evidence, the provisions of section 65(115) of definition of tour operator will not get attracted in the case before us as the vehicles which were used does not comply with the conditions laid down for the tourist vehicles as per the Motor Vehicles Act or the rules made thereunder - Decided in the favour of the assessee

Summary

Issues Involved:
1. Service Tax liability under Rent-a-Cab services.
2. Imposition of penalty under Section 78 of the Finance Act, 1994.
3. Non-imposition of penalty under Section 76 of the Finance Act, 1994.
4. Demand under Section 11D of the Central Excise Act, 1944.
5. Service Tax liability under Tour Operator's services.

Issue-wise Detailed Analysis:

1. Service Tax Liability under Rent-a-Cab Services:
The appellant admitted to the liability of Service Tax under Rent-a-Cab services and agreed to pay the balance and interest thereon. The tribunal upheld the confirmation of the demand and interest by the Adjudicating Authority, as the appellant did not contest this liability.

2. Imposition of Penalty under Section 78 of the Finance Act, 1994:
The appellant contested the imposition of an equal penalty of Rs. 12,99,388 under Section 78, claiming a bona fide error due to instructions from their clients that Service Tax was not applicable. The tribunal found that almost 90% of the Service Tax was paid promptly upon being informed, and the appellant's belief was bona fide. Invoking the provisions of Section 80 of the Finance Act, 1994, the tribunal set aside the penalty imposed under Sections 77 and 78, considering the appellant's bona fide belief and substantial compliance.

3. Non-imposition of Penalty under Section 76 of the Finance Act, 1994:
The revenue appealed for the imposition of penalty under Section 76, which was not imposed by the Adjudicating Authority. The tribunal, applying the same reasoning for setting aside the penalty under Section 78, rejected the revenue's appeal for the imposition of penalty under Section 76, invoking Section 80 of the Finance Act, 1994.

4. Demand under Section 11D of the Central Excise Act, 1944:
The Adjudicating Authority confirmed a demand of Rs. 15,56,751 under Section 11D, which the appellant contested, arguing no Service Tax was collected from customers. The tribunal found that the Adjudicating Authority did not correctly appreciate the evidence provided by the appellant regarding non-collection of amounts. Since the appellant was not liable to pay Service Tax under Tour Operator's services during the relevant period, the tribunal set aside the demand and the consequent interest liability under Section 11D, following established legal precedents.

5. Service Tax Liability under Tour Operator's Services:
The revenue appealed against the dropping of proceedings for Service Tax under Tour Operator's services. The Adjudicating Authority concluded that the appellant's vehicles were not tourist vehicles as defined under Section 2(43) of the Motor Vehicles Act, and thus, the tax liability could not be fastened under the category of tour operator. The tribunal agreed with this finding, noting that the revenue did not provide evidence to show the vehicles were registered as tourist vehicles. Consequently, the tribunal upheld the decision to drop the proceedings for Service Tax under Tour Operator's services.

Conclusion:
The tribunal allowed the appellant's appeal regarding the setting aside of penalties and the demand under Section 11D, while rejecting the revenue's appeal for the imposition of penalty under Section 76 and the Service Tax liability under Tour Operator's services.