2011 (4) TMI 1186 - AT - Service Tax

Waiver of pre-deposit - BAS - penalty equal to the amount of service tax - Held that - Peanlty under Section 78 is applicable to cases of fraud, collusion, suppression or willful misstatement with an intention to evade payment of service tax & assessee never had any intention to evade payment of tax. The appellants also stated that the entire amount of service tax of Rs.93,827/-, interest of Rs.15,876/- as well as penalty of Rs.14,000/- was deposited on 18.03.08. The amount of penalty of Rs.23,457/- also has been deposited - thus waive the condition of pre-deposit of service tax, interest and penalties and grant stay against the recovery of the same - Decided in favour of assessee.

Summary

Issues:
1. Service tax liability on marketing services rendered without payment.
2. Imposition and enhancement of penalties under various sections of the Finance Act.
3. Appellant's contention of lack of intention to evade tax and pre-deposit waiver request.

Analysis:
1. The case involved M/s. Rahul Trade Links entering into an agreement with M/s. Tata Teleservices Ltd. for marketing services without paying service tax. The Revenue demanded Rs.93,827, confirmed by Order No.17/2010, along with interest and penalties. The Additional Commissioner imposed penalties under Section 78 for failure to pay service tax and Section 77 for not filing statutory returns. The Commissioner (Appeals) enhanced the penalty to Rs.93,827 and imposed further penalties. The appellant argued against the penalties, stating they had no intention to evade tax and had already deposited the service tax, interest, and part of the penalties.

2. The appellant contended that penalties under Section 78 apply to cases of fraud, collusion, suppression, or willful misstatement to evade tax, which they claimed was not the case. They highlighted the timely deposit of the service tax, interest, and part of the penalties as evidence of their compliance. The tribunal considered the appellant's arguments and decided to waive the pre-deposit condition for service tax, interest, and penalties. Consequently, a stay was granted against the recovery of the amounts during the appeal process.

3. The judgment by the Appellate Tribunal CESTAT, Ahmedabad, delivered by P Babu, J., addressed the issues of service tax liability on marketing services, imposition and enhancement of penalties under the Finance Act, and the appellant's request for pre-deposit waiver. The tribunal found in favor of the appellant, acknowledging their compliance and lack of intent to evade tax, leading to the grant of a stay against the recovery of the disputed amounts during the appeal. The decision provided relief to the appellant while ensuring due process and consideration of tax obligations.