2014 (10) TMI 643 - AT - Service Tax

Waiver of penalty u/s 80 - Penalty u/s 76 & 77 - electrical illumination services - Held that - It is a fact that the appellant has provided temporary electrical illumination service to Govt. of Gujarat for celebrations of Independence Day, Republic Day and other State Govt. functions for which he could have entertained a bona fide belief that Service Tax liability may not arise on the services rendered by him. In my view, such belief is a justifiable reason to set aside the penalties under Sections 76 and 77 by invoking provision of Section 80 of Finance Act, 1994. In my view, the appellant has made out the case for invoking provisions of Section 80 of Finance Act, 1994, doing so I set aside the penalties imposed under Sections 76 and 77 of Finance Act, 1994 - Decided in favour of assessee.

Summary

Issues: Appeal against penalties imposed under Sections 76 and 77 of the Finance Act, 1994 for non-discharge of Service Tax liability on electrical illumination services provided to the State Government and private parties during a specific period.

Analysis:
1. Service Tax Liability: The appellant provided electrical illumination services to the State Government and private parties during a particular period but did not discharge the Service Tax liability. Lower authorities confirmed the demands, interest, and penalties after due process. The appellant paid a portion of the confirmed dues and argued that there was a bona fide belief that no tax liability arose due to services rendered for national holidays.

2. Appellant's Belief: The appellant contended that since the services were provided for celebrations of national holidays to the State Government, they believed no Service Tax liability would arise. The appellate tribunal examined the records and acknowledged that the appellant's belief was justifiable. The tribunal found that the appellant had a reasonable basis to believe that the services provided were exempt from Service Tax, invoking the provisions of Section 80 of the Finance Act, 1994.

3. Decision: After considering the arguments and perusing the records, the tribunal set aside the penalties imposed under Sections 76 and 77 of the Finance Act, 1994. The tribunal held that the appellant had made a valid case for invoking Section 80 of the Finance Act, 1994, based on the genuine belief regarding the tax liability exemption for services provided during national holiday celebrations. Consequently, the appeal was allowed, and the impugned order imposing penalties was overturned.

4. Conclusion: The tribunal's decision highlighted the importance of a genuine belief held by the appellant regarding the tax liability exemption for services provided to the State Government during national holiday events. By invoking Section 80 of the Finance Act, 1994, the tribunal set aside the penalties imposed under Sections 76 and 77, emphasizing the reasonable basis for the appellant's belief and the justifiability of exempting the penalties in this specific context.