2011 (9) TMI 324 - AT - Service Tax

Service tax - Security Agency Services - assessee have not paid service tax in respect of said service though in respect of other services they have paid service tax - original authority confirmed service tax alongwith interest and imposed penalty - appellants submits that they were under the bonafide belief that they were not liable to pay service tax in respect of the security agency service provided by them to a 100% EOU and the Pollution Control Authority of the Karnataka State - appellant is a small time service provider. In this connection he relies on the following decision Quality Welding Works Vs. Commissioner of C. Ex. Ludhiana 2010 -TMI - 201927 - CESTAT NEW DELHI - held that - no cause has been shown to invoke provisions of Section 80 to set aside the penalty - decided in against the assessee.

Summary

Issues:
1. Liability to pay service tax for 'Security Agency Services'.
2. Applicability of penalty under Section 78 of the Finance Act, 1944.
3. Invocation of provisions of Section 80 of the Finance Act for penalty waiver.

Analysis:
1. The appeal was against the order of the Commissioner (Appeals) confirming a service tax demand for 'Security Agency Services'. The appellant contended that they were not liable to pay service tax for services provided to specific parties, citing bonafide belief and reliance on certain decisions. However, the Tribunal found the appellant's reasoning unconvincing as they were a registered service provider paying tax for other services. The Tribunal held that the appellant's belief was not justified, leading to the rejection of the appeal.

2. The original authority imposed a penalty under Section 78 of the Finance Act, 1944, equal to the service tax demand. The appellant sought waiver of the penalty under Section 80 of the Finance Act, claiming payment of tax post the original authority's order as a sufficient cause. The Tribunal noted that the appellant did not dispute the service tax liability or interest before the Commissioner (Appeals). Despite the appellant's argument of being a small-time service provider, the Tribunal found no valid cause to set aside the penalty upheld by the Commissioner (Appeals).

3. The Tribunal emphasized that the appellant's payment of service tax after the original authority's order did not justify invoking Section 80 for penalty waiver. The Tribunal's decision was based on the lack of substantial evidence to support the appellant's claim of bonafide belief regarding the liability to pay service tax for the specific services in question. Consequently, the appeal was rejected, and the penalty under Section 78 of the Finance Act, 1944, was upheld.