2011 (1) TMI 853 - AT - Service Tax

Imposition of penalty - The assessees had intimated the Superintendent of Central Excise in-charge of the Tondiarpet Terminal about leasing out of storage tanks and also informed Assistant Commissioner (Central Excise) Chennai-I Commissionerate about the existence of two separate agreements one for leasing of storage tanks located in their premises and the other for various other services rendered to M/s. CPCL such as de-loading etc. - Therefore agree with the assessees that the charge and finding of suppression with intention to evade tax is not sustainable - Decided in favour of assessee.

Summary

Issues:
Imposition of penalty on service tax and education cess on lease rental received for tanks leased out. Allegation of suppression of facts to evade tax and applicability of extended period of limitation.

Analysis:

1. Imposition of Penalty on Service Tax and Education Cess:
The appeal challenged the penalty imposed on the demand of service tax and education cess amounting to Rs.1,02,19,325/- on lease rental received for tanks leased out. The Tribunal confirmed the demand under the provisions of Section 73(1) of the Finance Act, 1994, along with interest under Section 75. Additionally, a penalty equal to the tax amount, along with a daily penalty of Rs.200 from the due date until payment, was imposed under Sections 78 and 76 of the Act. The Tribunal considered the arguments from both sides before making its decision.

2. Allegation of Suppression of Facts:
The assessees had informed the relevant authorities about leasing out storage tanks to M/s. CPCL and the existence of separate agreements for tank leasing and other services. However, the Commissioner found fault with the assessees for not informing the officers in-charge of service tax matters about the separate agreement and not providing copies of the agreements to the concerned officers. This led to the allegation of suppression of facts with the intent to evade tax, allowing the department to invoke the extended period of limitation. Despite the disclosure of agreements to one Commissionerate, the failure to provide them to another Commissionerate was deemed as suppression. The Tribunal, however, disagreed with this finding, stating that the charge of suppression was not sustainable. Consequently, the penalties imposed on the assessees were set aside.

3. Conclusion:
The Tribunal partially allowed the appeal by setting aside the penalties imposed on the assessees. The operative portion of the order was pronounced in open court on 27.01.2011, bringing an end to the legal proceedings in this matter.