2007 (10) TMI 31 - AT - Service Tax

Penalty Treating service of arranging loans as Business Auxiliary Service Tax have been introduced recently, creating lot of confusion in the filed Malafide on part of appellant for not paying tax, not proved Penalty u/s 80 not imposable

Summary

Issues: Imposition of penalty under Sections 75A, 76, and 78 of the Finance Act 1994, review proceedings, applicability of Section 80 regarding penalty imposition, confusion regarding service tax liability, bona fide belief of the appellant.

In this case, the Appellate Tribunal CESTAT, New Delhi, reviewed a judgment where the Commissioner imposed a penalty on the appellant under Sections 75A, 76, and 78 of the Finance Act 1994 in review proceedings, despite the Assistant Commissioner's initial decision not to impose any penalty under Section 80. The appellant, engaged in arranging finance/loans, had Service Tax confirmed against them, which they paid along with interest. The original adjudicating authority found no need for a penalty under Section 80. The appellant challenged the imposition of a personal penalty by the Commissioner, arguing a bona fide belief as per Section 80 and strengthened by previous decisions. The Tribunal agreed with the appellant, noting the confusion surrounding the recent introduction of Service Tax and the absence of mala fide intent on the appellant's part. The Tribunal held that Section 80 applied, and the Assistant Commissioner rightly exercised discretion, setting aside the Commissioner's order and restoring the original decision. The appeal was allowed accordingly.