2015 (10) TMI 2461 - AT - Service Tax

Service Tax Liablity - Cargo handling, repairs and maintenance, storage and warehouse and technical inspection and certification - Whether adjudicating authority erred in not imposing penalty under Section 76 of Finance Act from 18/04/2006 i.e., ₹ 200/- per day or 2% of amount of tax payable? - Revenue contends that since issue has already been decided appeal for non-taxability by assessee should not be allowed - Respondent contends that Service tax on cargo handling is per se not taxable and technical inspection and certification is in respect of containers which was done as per request and not get covered under technical inspection and certification services - No service tax liability on part of assessee as same has been complied with interest - Held That - Respondent cannot be allowed to re-argue entire case on merits and it was for him to put forth all his submission on merits of case when its appeal was being heard - Period from 18/04/2006, penalty as imposed under Section 76 has to be applied in letter and spirit of said section and provisions as it stood in the statute needs to be applied - Decided in favour of Revenue.

Summary

Issues:
1. Imposition of penalty under Section 76 of the Finance Act, 1994.
2. Interpretation of service tax liability on various services.
3. Application of Section 76 penalty provisions.

Issue 1: Imposition of Penalty under Section 76:
The appeal filed by the Revenue challenges the Order-in-Original passed by the Commissioner of Service Tax, Mumbai, seeking imposition of penalty under Section 76. The Departmental Representative argues that the penalty should be imposed from 18/04/2006 at a rate of Rs. 200 per day or 2% of the tax amount per month. The respondent contests this penalty, claiming that there was no liability to pay service tax as the entire tax liability and interest had been paid before the order-in-original. The respondent's counsel relies on legal precedents to support the argument that penalty cannot be imposed when there is no tax liability. The Tribunal, after considering both sides' submissions, upholds the penalty as per the provisions of Section 76 effective from 18/04/2006.

Issue 2: Interpretation of Service Tax Liability:
The respondent disputes the service tax liability on cargo handling, technical inspection, and certification services. The respondent's counsel argues that these services were not taxable and that the penalty proceedings were initiated during an assessment procedure. The counsel contends that penalty can only be imposed if there is a liability to pay service tax. However, the Tribunal notes that the respondent had the opportunity to present these arguments during the earlier appeal, where the service tax liability was confirmed. The Tribunal holds that the penalty under Section 76 must be applied as per the statutory provisions, disregarding the respondent's arguments on the non-taxability of certain services.

Issue 3: Application of Section 76 Penalty Provisions:
The Tribunal emphasizes that the penalty under Section 76 is to be calculated based on a daily rate or a monthly percentage of the tax amount during the default period. Despite the respondent's reliance on legal cases to support their position, the Tribunal maintains that the penalty must be imposed as per the clear provisions of Section 76. The Tribunal dismisses the respondent's arguments on the merits of the case, as those had already been addressed and rejected in a previous final order. Ultimately, the Tribunal allows the appeal filed by the Revenue, upholding the penalty as per Section 76 for the relevant period.

This comprehensive analysis of the judgment covers the issues of penalty imposition under Section 76, interpretation of service tax liability, and the application of penalty provisions as decided by the Appellate Tribunal CESTAT MUMBAI.