2007 (8) TMI 92 - AT - Service Tax

Penalty - Appellant is a foreign company providing consulting engineer service to the P.W.D. of Karnataka and as per agreement P.W.D. liable to pay service tax, hence appellant not liable for penalty - Penalty imposed on appellant set aside

Summary

Issues:
1. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.
2. Applicability of penalties on a Foreign based Company.
3. Interpretation of legal citations and precedents.
4. Discharge of service tax liability by the Indian Company.

Analysis:
1. The appeal arose from the Review Adjudication Order where the Commissioner imposed penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The penalties included Rs. 100/- per day for failure to pay service tax, Rs. 1000/- under Section 77, and Rs. 12,00,000/- under Section 78. The Tribunal considered the submissions of the appellant regarding penalty imposition on a Foreign based Company.

2. The Tribunal heard arguments from both sides regarding the applicability of penalties on a Foreign based Company. The learned DR cited a Chennai Bench case, while the Chartered Accountant referred to a Kolkata Tribunal case involving a Foreign based Company. The Tribunal agreed with the Chartered Accountant that the Chennai Bench case did not apply to the Foreign based Company's penalty imposition. The Tribunal found the Kolkata Tribunal case's facts similar to the present case, where the service tax liability was on the Indian Company, not the Foreign based Company.

3. After careful consideration of submissions, the Tribunal agreed with the Chartered Accountant's interpretation of legal citations. The Tribunal found the Kolkata Tribunal case's ratio applicable and set aside the penalties imposed on the appellants. By following the cited judgment, the Tribunal allowed the appeal with consequential relief if any.

4. The judgment was pronounced and directed in the open court, reflecting the Tribunal's decision to set aside the penalties imposed on the Foreign based Company based on the interpretation of legal citations and the discharge of service tax liability by the Indian Company as per the agreement terms.