2015 (12) TMI 812 - AT - Service Tax

Demand of service tax - surface and sub-service surveying - Imposition of penalty - Benefit of Section 80 - Held that - Appellant has discharged the interest also along with service tax liability. In our considered view the issue of service tax liability on the survey and exploration was in the period when there was no clarity as to the taxability of work done for ONGC. We agree with the learned Counsel s submissions that having discharged the entire service tax liability and the interest thereof, the penalty need not be imposed on appellant. We hold that the appellant has made out a justifiable cause for invoking the provisions of Section 80 of the Finance Act, 1994. Invoking the said section 80, we set aside the penalties imposed on the appellant under the impugned order and allow the appeal to that extent. - Petition disposed of.

Summary

Issues involved: Service tax liability on the appellant under the category of "surface and sub-service surveying" in relation to location and exploration of deposits of oil and gas to M/s. ONGC Ltd.

Analysis:

1. Issue of Service Tax Liability: The appeal was directed against an Order-in-Original passed by the Commissioner of Service Tax, Mumbai. The appellant had discharged the entire amount of service tax liability almost two years prior to the issuance of the show-cause notice. The adjudicating authority also noted that the appellant was not contesting the issue on merits. The interest liability on the amounts confirmed as service tax liability was a point of contention. The appellant had paid an interest of Rs. 2,50,131, which was found to be less than the actual interest liability of Rs. 5,50,117. The differential interest was paid by the appellant on a later date, which was evidenced by a Challan submitted to the Superintendent of Service Tax, Navi Mumbai.

2. Clarity on Taxability: The Tribunal acknowledged that during the period in question, there was ambiguity regarding the taxability of work done for M/s. ONGC Ltd. The appellant had discharged both the service tax liability and the interest thereof. The Tribunal agreed with the appellant's counsel that since the appellant had fulfilled their tax obligations, the penalty need not be imposed. The Tribunal held that the appellant had a justifiable cause for invoking the provisions of Section 80 of the Finance Act, 1994. Consequently, the penalties imposed on the appellant under the impugned order were set aside, and the appeal was allowed to that extent.

3. Conclusion: The Tribunal disposed of the appeal by setting aside the penalties imposed on the appellant and allowing the appeal on that specific issue. The appellant's compliance with the service tax liability and interest payment played a crucial role in the Tribunal's decision to relieve the appellant of the penalty. The judgment highlighted the importance of fulfilling tax obligations and the consequences of non-compliance in the context of service tax liability related to survey and exploration activities for M/s. ONGC Ltd.