2015 (12) TMI 279 - AT - Service Tax

Demand of service tax - Mining Services - Imposition of penalty - Benefit of Section 80 - Held that - Statements of the partner of the appellant was recorded on 2nd February 2010, wherein the partner has specifically recorded that since they were located at remote Village, they were not aware about the legal provisions and that they being farmers, and the Mining activity having been undertaken for the first time by them, they failed to discharge the service tax liability; that the service tax liability has been discharged subsequently and had sought leniency in non imposing the penalties. We find that there is no dispute as to the facts as the appellant are partnership firm of farmers and are situated in remote area in Ratnagiri district and may not have had access to the legal opinion as to taxability of the services rendered by them. This can be deduced from the statements recorded by the lower authorities. In our considered view, appellant had made out a case for setting aside the penalties, by invoking the provisions of section 80 of the Finance Act 1994. - However, Demand of service tax is upheld - Decided partly in favour of assessee.

Summary

Issues: Service tax liability under "Mining Services" for the period September 2008 to September 2009; Penalties imposed on the appellant.

Analysis:

Service Tax Liability Issue:
The case involved a dispute regarding the service tax liability under the category of "Mining Services" for a specific period. The appellant had failed to register with the department and pay the service tax liability, leading to penalties being imposed. The appellant claimed they were unaware of the tax liability due to being located in a remote village and engaging in mining activity for the first time. The counsel argued that the penalties should be set aside under section 80 of the Finance Act 1994. The departmental representative contended that the appellant should have discharged the tax liability and checked with departmental officers regarding taxability. The tribunal confirmed and upheld the service tax liability for the period in question, as the appellant did not seriously contest the issue on merits.

Penalties Imposed Issue:
Regarding the penalties imposed, the tribunal considered the partner of the appellant's statement, where it was mentioned that due to being located in a remote village and being farmers engaging in mining for the first time, they were unaware of the legal provisions leading to the failure to discharge the service tax liability. The partner sought leniency in not imposing penalties, which was supported by the circumstances of the appellant being a partnership firm of farmers situated in a remote area. The tribunal found that the appellant had a justifiable cause for non-discharge of the tax liability during the material period and invoked section 80 of the Finance Act 1994 to set aside the penalties imposed by the lower authorities. Thus, the penalties were waived based on the circumstances presented.

In conclusion, the tribunal upheld the service tax liability under "Mining Services" for the specified period but set aside the penalties imposed on the appellant by invoking section 80 of the Finance Act 1994, considering the appellant's genuine circumstances and lack of awareness regarding the tax liability.