2011 (7) TMI 940 - AT - Service Tax

Demand - Business auxiliary service - Contention of Revenue is that in the impugned order there is a finding that there is a wilful suppression of fact with intent to evade payment of Service Tax - The very fact that the legislature has included Section 78 within the scope of Section 80 of Finance Act would imply that even in cases where suppression is involved the adjudicating authority can exercise power under Section 80 of the Act - the authority is duly empowered under section 80 to waive the penalty under Section 78 in case the assessee discloses sufficient cause for exercise of such power. The authority below on analysis of materials on records his held that though there was to some extent suppression of facts, the assessee had immediately cleared the tax liability upon being pointed out - Decided in favor of the assessee

Summary

Issues:
- Appeal against demand of Service Tax
- Imposition of penalty under Section 76/78 of the Finance Act
- Invocation of Section 80 of the Finance Act
- Interpretation of Section 78 within the scope of Section 80
- Application of precedents in similar cases

Analysis:

The Appellate Tribunal CESTAT, New Delhi heard an appeal filed by the Revenue against an order by the Commissioner confirming a demand of Service Tax amounting to Rs. 1,56,48,080.91 on the grounds that the Respondents provided business auxiliary service to a specific entity. The Revenue contended that despite a finding of wilful suppression of facts with intent to evade payment of Service Tax, the Commissioner did not impose any penalty under Section 76/78 of the Finance Act. The Revenue argued that the Respondents should be liable for penalty due to the suppression of facts.

On the other hand, the Respondents argued that they were registered with the Revenue authorities as a provider of business auxiliary service and were paying service tax, with the default occurring in the service provided to the specific entity. They highlighted that upon being informed by the entity to not pay Service Tax, they stopped until the Revenue pointed out the error. The Respondents promptly paid the tax along with interest, invoking Section 80 of the Finance Act as a reasonable cause for the delay.

The Tribunal noted that Section 78 falls within the scope of Section 80 of the Finance Act, allowing the adjudicating authority to waive penalties even in cases involving suppression of facts. Referring to a precedent involving CST v. Kuoni Travel (India) Ltd., the Tribunal emphasized the authority's power to waive penalties under Section 78 if sufficient cause is disclosed. In the present case, the Tribunal found that the Respondents promptly paid the tax upon notification by the Revenue, cooperated with the authorities, and thus upheld the adjudicating authority's discretion under Section 80 of the Finance Act.

Ultimately, the Tribunal dismissed the appeal, citing the Respondents' immediate tax payment, cooperation with the Revenue authorities, and the absence of grounds for interference with the adjudicating authority's decision under Section 80 of the Finance Act.