2011 (3) TMI 319 - AT - Service Tax

Demanded, interest and penalty - Late depositing of service tax - Appellant submitted that the service tax liability and interest have been discharged, though not by the service provider but by the person who received the service. So there are technical violations of the relevant laws - However considering that these difficulties were caused due to the improper stand of a Government Company we are inclined to take a lenient view in the matter - Since all duties have been remitted into the treasury as per submission of the appellant waive the related demands made in the impugned order - Further invoking the provisions of section 80 of the Finance Act, 1994 drop all penalties imposed in the impugned order - Decided in favour of assessee.

Summary

Issues:
Service tax liability of the appellant for security services provided to BSNL, non-remittance of service tax to the treasury, interest and penalty imposed for late deposit, appeal against Order-in-Original upheld by Commissioner of Central Excise (Appeals), second appeal challenging the Commissioner's order.

Analysis:

1. The appellant, engaged in providing security services to BSNL, faced a dispute regarding the payment of service tax. BSNL, instead of paying service tax directly, deducted the amount from the invoices raised by the appellant and deposited it in a nominated bank. The appellant was issued certificates by BSNL confirming the deduction and deposit of service tax, along with TR-6 challans as evidence.

2. A Show-Cause Notice was issued to the appellant for non-remittance of service tax to the treasury as required by section 68 of the Finance Act, 2004. The Superintendent demanded interest and penalty for late depositing of service tax, acknowledging the payment of service tax by the appellant.

3. The Order-in-Original confirmed the demand of service tax, interest, and penalty on the appellant. The Commissioner of Central Excise (Appeals) upheld this order, leading to the appellant filing a second appeal challenging the decision.

4. During the Tribunal hearing, it was noted that BSNL had indeed deposited the service tax amount with the government, although no specific clarifications were provided as requested. The Tribunal considered the technical violations and the fact that the service tax liability and interest were discharged by BSNL, not the appellant.

5. The Tribunal decided to take a lenient view due to the improper stand of a Government Company, waiving the demands made in the impugned order and dropping all penalties imposed. However, it was emphasized that this decision should not set a precedent for non-compliance with relevant rules in the future, and the department reserved the right to recover any unpaid interest after providing notice and an opportunity for the appellant to present evidence.

6. Ultimately, the appeal was disposed of with the waiver of demands and penalties, with a clear directive for the appellant to ensure compliance with relevant rules in the future and the possibility of interest recovery by the department if not paid.

This detailed analysis covers the issues of service tax liability, non-remittance of tax, interest, penalties, appeal process, and the final judgment, providing a comprehensive understanding of the legal judgment delivered by the Appellate Tribunal CESTAT, NEW DELHI.