2013 (12) TMI 102 - AT - Service Tax

Interpretation of Notification - Penalty u/s 80 - Notification 56/98-ST dated 7.10.1998 - Whether the respondents are entitled for the benefit of the Notification 56/98-ST dated 7.10.1998 - Security service to the Banks - Held that - As per the agreement, the respondents are responsible for safeguarding the building of the bank along with the fixtures, fittings and equipments, cash, other securities etc. Therefore, it cannot be said that the respondents are providing security services in relation to safe deposit lockers or security of safe vaults. In view of this the benefit of notification is not available to the respondents - respondents are registered with the Revenue authorities as service provider and paying appropriate service tax - Therefore, penalty is waived off - Decided partly in favour of assessee.

Summary

Issues:
1. Entitlement of the respondents for the benefit of Notification 56/98-ST dated 7.10.1998.
2. Imposition of penalties under section 80 of the Finance Act.

Entitlement of the Respondents for the Benefit of Notification 56/98-ST:
The Revenue appealed against the Commissioner (Appeals) order granting the benefit of Notification no. 56/98-ST to the respondents, dropping a demand of Rs.3,57,362/- and consequential penalty. The Revenue argued that the respondents provided security services to banks, not covered under the notification. The agreement showed the respondents safeguarded the banks' building, fixtures, cash, etc. The respondents contended that they were entitled to the notification's benefit as they provided security services to the banks. The Tribunal examined the agreement and noted that the respondents were responsible for safeguarding the bank's building and assets, not related to safe deposit lockers or vaults. Consequently, the Tribunal held that the benefit of the notification was not available to the respondents.

Imposition of Penalties under Section 80 of the Finance Act:
Regarding the imposition of penalties, the Tribunal referred to section 80 of the Finance Act, which states that no penalty shall be imposed if the assessee proves a reasonable cause for the failure. The respondents were registered with the Revenue authorities and paying service tax appropriately. The issue in the appeal pertained to the interpretation of the Notification. Considering the provisions of section 80, the Tribunal waived the imposition of penalties. The appeal was disposed of accordingly.

This judgment centered on the entitlement of the respondents for the benefit of Notification 56/98-ST and the imposition of penalties under section 80 of the Finance Act. The Tribunal analyzed the nature of services provided by the respondents to banks in relation to the notification's scope, ultimately ruling that the benefit was not applicable. Additionally, the Tribunal considered the provisions of section 80 to waive the penalties imposed on the respondents due to the reasonable cause for the failure related to the interpretation of the Notification.