2018 (1) TMI 1486 - AT - Service Tax

Imposition of penalty u/s 77 and 78 - tax liability discharged - Held that - The contention of the appellant is that they applied for Service Tax registration in May, 2010. This fact is not clearly coming from the records of the case. In any event, it shows that the appellant was aware of the levy of service tax which they have not discharged within the stipulated time. Therefore, the submission of the Learned Counsel of the bona fide belief on the part of the assessee cannot be accepted. The Commissioner (Appeals) had modified the Adjudication Order and imposed penalty of equal amount under Section 78. In such situation, the benefit under Section 80 of the Act 1994 should be extended in respect of penalties under Section 77(1)(a) and 77(2) as the same are excessive. The demand of Service Tax along with interest is upheld and penalty under Section 78 is also upheld - rest of penalties set aside - appeal allowed in part.

Summary

Issues:
1. Service Tax liability for "erection, commissioning or installation service" and "Works Contract Service" provided to specific entities.
2. Dispute regarding the payment of Service Tax for a specific period.
3. Application for Service Tax registration and the belief of the appellant regarding the liability to pay Service Tax.
4. Imposition of penalties under Section 78 of the Finance Act, 1994.

Analysis:
1. The appeal was filed against the Order-in-Appeal by the Commr. of Central Excise & S. Tax, Ranchi, confirming the demand of Service Tax for a specific period. The appellant provided "erection, commissioning or installation service" and "Works Contract Service" to certain entities, leading to the issuance of a Show Cause Notice for alleged evasion of Service Tax.

2. The adjudicating authority confirmed the demand of Service Tax along with interest and penalties. The Commissioner (Appeals) modified the Adjudication Order by recalculating the Service Tax after giving cum-duty-benefit and imposed penalties under Section 78 of the Finance Act, 1994. The appellant contended that they applied for Service Tax registration in May, 2010, but no registration was issued. They believed that services to Public Sector Undertakings were not taxable and had not collected Service Tax from customers.

3. The Learned Counsel argued that the appellant's belief in non-liability for Service Tax was bona fide, citing various decisions. However, the Tribunal noted that the appellant's awareness of the levy of Service Tax was evident by their application for registration, even if not issued. The contention of bona fide belief was not accepted as the tax was not discharged within the stipulated time.

4. The Tribunal agreed with the appellant's submission that the benefit under Section 80 of the Act should be extended regarding penalties under Section 78, considering them excessive. While the case laws cited by the Learned Counsel were found inapplicable, the demand of Service Tax with interest and penalty under Section 78 was upheld, while other penalties were set aside. The appeal was partly allowed by the Tribunal.

This detailed analysis of the judgment highlights the key issues, arguments presented, and the Tribunal's decision on each aspect, maintaining the legal terminology and significant details from the original text.