2013 (11) TMI 1258 - AT - Service Tax

Online information and database access and or retrieval service Penalty u/s 75A, 76, 77 and 78 of the Finance Act, 1994 Held that - Service tax is new legislation and debated only of late, there is no room for suppression or intent to evade payment of service tax - The service will fall in the ambit of service tax levy - At the same time, it is reasonable to expect that the appellants, who made their foray with these services only in October 2001, would, at least in the initial years, concentrate their efforts into making their entrepreneurship a success - any omission to suo moto come forward and discharge their service tax liability could very well have been due to ignorance of the liability or bonafide confusion concerting the taxing provisions or a combination of both but certainly not with intent, by suppression or concealment - The benefit of doubt must be extended to the appellant - reasonable cause for the failure on the part of the assessee in discharging their duty liability - this is a fit case for invocation of the provisions of Section 80 of the Act and revoke the penalties imposed. The Commissioner has merely observed that the appellant failed to pay service tax in accordance with the provision of Finance Act, 1944, and a penalty u/s 76 is liable to be imposed - But, in other appeal, Commissioner (Appeals) had discussed in detail for invoking Section 80 of the Act the finding of the Commissioner (Appeals) is proper and reasonable - after this proceedings, the appellants have been paying service tax regularly thus the penalty imposed under Section 76 is not sustainable.

Summary

Issues Involved:
1. Compliance with stay orders issued by the Tribunal.
2. Tax demand for providing matrimonial services.
3. Imposition of penalties under Section 76 of the Finance Act, 1994.

Issue 1: Compliance with Stay Orders
The judgment discusses the dismissal of Appeal Nos. ST/25/2006 and No. ST/180/06 by the Tribunal due to non-compliance with stay orders dated 23.6.2006 and 9.1.2007. The appellants moved before the Madras High Court, which directed compliance with the stay orders within four weeks. Upon compliance, the Tribunal was instructed to proceed with the appeals. The appellants submitted a compliance report on 19.12.12, leading to the hearing and disposal of both appeals.

Issue 2: Tax Demand for Matrimonial Services
The case involves a demand for service tax amounting to Rs.60,72,781/- for the period from Oct 01 to May 04, categorized under "online information and database access and retrieval service." The original authority confirmed the tax demand, penalties, and interest. The Commissioner (Appeals) modified the demand to Rs.56,57,756/-, setting aside penalties except for non-registration. Another show cause notice was issued for a tax demand of Rs.74,31,412/- for the period from June 04 to March 05, with penalties under Sections 76, 77, and 78 imposed. The appellants contested the penalties but did not dispute the tax demand on merit.

Issue 3: Imposition of Penalties under Section 76
The discussion revolves around the imposition of penalties under Section 76 of the Finance Act, 1994. The Commissioner imposed penalties for non-payment of service tax, which the appellants challenged. The Advocate argued against the penalties, emphasizing compliance post the proceedings. The Revenue's representative supported the Commissioner's findings, stating that penalties were justified due to non-payment despite knowledge of the tax liability. The Tribunal analyzed the Commissioner's orders and found that the penalties under Section 76 were not sustainable in Appeal No. ST/180/06. The judgment upheld the Commissioner (Appeals) decision in Appeal No. ST/25/2006 and dismissed the appeal, while modifying the order in Appeal No. ST/180/2006 to set aside the penalty under Section 76.

This detailed analysis of the judgment covers the issues of compliance with stay orders, tax demand for matrimonial services, and the imposition of penalties under Section 76 comprehensively.