2012 (12) TMI 541 - AT - Service Tax

Travel Agent Services - Demand of Service Tax, Interest and Penalty - denial of SSI benefit - Held that - In view of the fact that during the previous year appellants were availing the SSI benefit, denial of the same in the next year on the ground of non-filing of declaration is not appropriate. Even after surrendering of certificate and treating it as declaration, it was the bounden duty of the appellants to register themselves when they crossed the turn over of Rs.3 lakhs and to start following the statutory procedure, but they have failed to do so. Since they have failed to do so demand for service tax of Rs. 2930/- with interest is upheld and penalty under section 76 and Section 78 at Rs. 2930/- each is upheld. Penalty amounting to Rs. 1000/- u/s. 77 also confirmed.

Summary

Issues:
1. Denial of Small Scale Industry (SSI) benefit
2. Demand for service tax, interest, and penalties

Analysis:

Issue 1: Denial of Small Scale Industry (SSI) benefit
The case involved the appellant providing taxable services as a 'Travel Agent' and facing allegations of evasion of service tax. The investigation revealed that the appellant had not obtained the necessary service tax Registration Certificate despite operating the business since September 2005. The appellant had previously surrendered the registration certificate due to low turnover but failed to re-register upon crossing the turnover limit of Rs.3 lakhs. The appellant argued that denial of SSI benefit was incorrect as they had availed it in the previous year. The Appellate Tribunal acknowledged the previous benefit but emphasized the appellant's obligation to register and pay service tax upon crossing the turnover threshold. Consequently, penalties under Section 76, 77, and 78 of the Finance Act, 1994 were deemed appropriate due to the appellant's non-compliance.

Issue 2: Demand for service tax, interest, and penalties
A demand for service tax amounting to Rs.45,101/- was confirmed against the appellant, along with interest and penalties under Section 76, 77, and 78 of the Finance Act, 1994. The appellant contested the denial of SSI benefit, arguing that the demand should only be Rs.2,930/-, which had already been paid with interest. The Appellate Tribunal considered the submissions and upheld the demand for service tax of Rs.2,930/- with interest. Additionally, penalties under Section 76 and Section 78 at Rs.2,930/- each were upheld, along with a penalty of Rs.1,000/- under Section 77 of the Finance Act, 1994. The appeal was disposed of with the penalties maintained as imposed by the lower authority.

In conclusion, the judgment addressed the issues of denial of SSI benefit and the demand for service tax, interest, and penalties in the context of the appellant's non-compliance with registration and payment obligations under the Finance Act, 1994. The Appellate Tribunal upheld the penalties imposed, emphasizing the importance of adhering to statutory procedures and fulfilling tax obligations in a timely manner.