2007 (7) TMI 103 - AT - Service Tax

Appellant got themselves registered with department 26-06-01 and liable for service tax from 16-10-98 After considering the fact appellant has been directed to deposit remaining amount of tax and recovery of penalty stayed

Summary

Issues:
1. Liability to pay service tax from a specific date
2. Applicability of penalties under various sections of the Finance Act, 1994
3. Disputed tax payment and promise of payment from a third party
4. Direction to pay remaining tax amount and waiver of penalty

Analysis:

Issue 1: Liability to pay service tax from a specific date
The Commissioner concluded that the appellant, a provider of Security Services, was liable to pay service tax from 16-10-1998, the date when service tax on security services became leviable. Despite getting registered with the department on 28-6-2001, it was found that the appellant had been providing security services since 1994. The failure to pay service tax on past liability and the suppression of facts led to the imposition of penalties under Section 78 of the Finance Act, 1994. The Commissioner emphasized that the liability to pay service tax arises when the value of taxable service is received from customers, regardless of whether the service tax amount has been received.

Issue 2: Applicability of penalties under various sections of the Finance Act, 1994
The Commissioner imposed penalties on the appellant under different sections of the Finance Act, 1994. While upholding the minimum penalty equivalent to the service tax under Section 78, the penalty under Section 76 was reduced from Rs. 200/- per day to Rs. 100/- per day. The penalty of Rs. 1000/- under Section 77 was deemed reasonable and upheld. The Commissioner clarified that non-receipt of service tax from customers could only be a mitigating circumstance for imposing penalties under other sections of the Act.

Issue 3: Disputed tax payment and promise of payment from a third party
The appellant claimed that 75% of the tax amount had been paid, stating that the remaining tax would be paid upon receiving the due amount from a semi-Government body. The appellant never disputed the levy and had committed to pay once the payment from the third party was received. The Tribunal directed the appellant to pay the remaining tax amount within six weeks, failing which the appeal would be dismissed. The waiver of the penalty was contingent upon the payment of the remaining tax amount.

Issue 4: Direction to pay remaining tax amount and waiver of penalty
In light of the facts and circumstances, the Tribunal instructed the appellant to settle the outstanding tax amount as per the impugned order within six weeks. Failure to comply would result in the dismissal of the appeal. The Tribunal granted a waiver on the remaining penalty until the matter was finally heard, with a compliance report due on a specified date.

This detailed analysis covers the key issues addressed in the judgment by the Appellate Tribunal CESTAT, NEW DELHI, providing a comprehensive overview of the legal implications and directives outlined in the decision.