2007 (9) TMI 114 - AT - Service Tax

If service tax is not collected separately by assessee then cum-duty benefit is allowable to assessee Tax paid after issue of SCN Considering the facts of case penalty u/s 80 is rightly set aside But penalty u/s 77 is upheld No ground to interfere with impugned order

Summary

Issues:
1. Liability for payment of Service Tax on Security Services provided without registration.
2. Benefit of Cum-duty price principle.
3. Imposition of penalties under Sections 76, 78 of the Finance Act, 1994.
4. Applicability of Central Excise provisions to Service Tax.
5. Discretion of appellate authority under Section 80 of the Finance Act.

Liability for payment of Service Tax on Security Services provided without registration:
The respondent provided Security Services without registering for Service Tax payment. The original authority demanded Service Tax, interest, and imposed penalties. The Commissioner (Appeals) upheld the liability for Service Tax but granted the benefit of the Cum-duty price principle as per the case of CCE v. M/s. Maruti Udyog Ltd. The Revenue appealed against this decision, arguing that the Service Tax should be collected only on the value of taxable services rendered.

Benefit of Cum-duty price principle:
The Commissioner (Appeals) granted the Cum-duty benefit to the respondents based on the principle in the case of M/s. Maruti Udyog Ltd. The appellate tribunal found no strong grounds to differ from this decision, noting that the respondents did not collect Service Tax separately from clients. The tribunal upheld the Commissioner's decision in this regard.

Imposition of penalties under Sections 76, 78 of the Finance Act, 1994:
The Revenue contended that penalties under Sections 76 and 78 were warranted due to non-payment of Service Tax within the extended period. However, the Commissioner (Appeals) set aside these penalties invoking Section 80 of the Finance Act. The tribunal observed that penalties were not warranted when tax was paid before the issue of Show Cause Notice. Although the tax was paid after the notice in this case, the tribunal upheld the Commissioner's decision to set aside the penalties.

Applicability of Central Excise provisions to Service Tax:
The Revenue argued that the Cum-duty price benefit should not apply to Service Tax as Central Excise provisions cannot be extended to Service Tax. However, the tribunal did not find merit in this argument and upheld the application of the Cum-duty principle in this case.

Discretion of appellate authority under Section 80 of the Finance Act:
The Commissioner (Appeals) used discretion under Section 80 to set aside penalties imposed under Sections 76 and 78. The tribunal found no strong grounds to interfere with this decision, especially considering that penalties were not warranted when tax was paid before the Show Cause Notice. The tribunal dismissed the Revenue's appeal, upholding the Commissioner's order.