2012 (4) TMI 471 - AT - Service Tax

Penalty imposed u/s 76, 77 & 78 of Finance Act 1994 - Cable operator period 1.9.03 to 31.3.06 services taxable w.e.f. 16.08.2002 assessee pleaded illiteracy, bona fide belief of non-taxability of said service and financial hardship Held that - Service tax together with interest is confirmed as not contested by the applicant. Tribunal in the case of Krishna Satellite Cable Network v. CCE 2008 - TMI - 31294 - CESTAT NEW DELHI has held that there could be bona fide reasons on the part of the assessee, who was cable operator and was receiving signals from multiple system operator, as regards the fact of services not being taxable. In view of aforesaid, penalties are set aside Decided in favor of assessee.

Summary

Issues:
1. Confirmation of Service Tax demand against the appellant for providing cable operator services.
2. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act.

Analysis:
1. The judgment confirms the Service Tax demand of Rs. 45,732 against the appellant for providing cable operator services during the period from 1.9.03 to 31.3.06, which were made taxable from 16.8.2002. Additionally, a penalty of Rs. 500 was imposed under Section 77, along with penalties under Sections 76 and 78 of the Finance Act. The appellant did not dispute the demand but challenged the imposition of penalties based on confusion regarding the liability of services for Service Tax during the relevant period.

2. The appellant, represented by a learned advocate, argued that the demand originally confirmed by the Assistant Commissioner was higher, but it was reduced by the Commissioner (Appeals) due to the benefit of cum duty price and valuation of services. The appellant claimed to have received signals from multiple system operators, not directly from the satellite, leading to a genuine belief that Service Tax was not applicable. The appellant, described as an illiterate person with financial constraints, had paid the Service Tax from personal funds. The advocate requested the setting aside of penalties based on these grounds.

3. The Tribunal considered precedents, specifically citing the case of Krishna Satellite Cable Network v. CCE and Sharp Communication v. CCE, where penalties were set aside for cable operators due to bona fide reasons and infancy stage of legal interpretations. Relying on these decisions, the judge set aside the penalties imposed under various sections of the Finance Act but confirmed the Service Tax demand along with interest.

4. In conclusion, the judgment disposed of the appeal by setting aside the penalties under the Finance Act while confirming the Service Tax demand and interest. The decision was based on the appellant's genuine belief regarding the tax liability for cable operator services and the precedents where penalties were waived for similar reasons.