2010 (12) TMI 781 - AT - Service Tax

leviability of penalty - the appellants did not deposit the amounts as soon as it was collected or at the time when they were supposed to deposit with the Government. Be that as it may, entire dues were paid on 31-3-2007 along with interest while show-cause notice was issued on 24-9-2007. This case is not the case for imposition of penalty under Section 78 as there was no suppression of facts. In view of this, we set aside equal penalty imposed under Section 78 of the Finance Act, 1994 on this amount by the Adjudicating Authority. We uphold the penalty imposed by the Adjudicating Authority on this amount under Section 76 of the Finance Act, 1994.  As regards the eligibility to avail the abatement of 67% as per the Notification No. 1/2006, we find from the perusal of the documents produced before us, that the appellants had reversed the entire amount of Cenvat Credit taken on common inputs, and his plea as to applicability of provisions of Rule 6(3) of the Cenvat Credit Rules, needs to be gone into detail by the appreciation of the evidences on record, which could not be done by this Tribunal at this juncture as the Adjudicating Authority has not recorded any findings on these pleas. In view of this, we set aside the demands, interest thereon and the penalties

Summary

Issues:
1. Liability to pay service tax on construction services.
2. Penalty imposition for non-depositing service tax.
3. Classification of construction services as 'works contract'.
4. Eligibility for abatement under Notification No. 1/2006.

Analysis:
1. The appeal addressed the liability of the appellants to pay service tax for various services rendered, including construction services. The appellants were found to have not discharged service tax liability for services provided to a specific plant despite receiving consideration. The Adjudicating Authority determined the appellants' liability for service tax on specific services rendered during a particular period and imposed penalties under relevant sections of the Finance Act, 1994.

2. The issue of penalty imposition for non-depositing service tax amounting to Rs. 9,24,430 was contested. The appellants argued that the amount was paid before the issuance of the show-cause notice due to financial difficulties. The Tribunal found that the entire dues were paid before the notice was issued, hence setting aside the penalty under Section 78 but upholding the penalty under Section 76, directing the appellants to deposit the penalty amount within a specified timeframe.

3. Regarding the classification of construction services as 'works contract' and the eligibility for abatement under Notification No. 1/2006, the appellants raised new legal points during the appeal. The Tribunal noted that these points were not raised before the Adjudicating Authority. As a result, the matter was remanded back to the Adjudicating Authority for re-consideration, allowing the Authority to evaluate these submissions and make a fresh decision following the principles of natural justice.

4. In conclusion, the Tribunal disposed of the appeal by setting aside penalties on specific issues, remanding the matter back to the Adjudicating Authority for further consideration, and keeping the issues open for reevaluation. The decision aimed to ensure a fair assessment of the legal points raised by the appellants and to uphold procedural fairness in the adjudication process.