2008 (1) TMI 258 - AT - Service Tax

Appellant had not paid the tax on due date as they were under the bona fide belief that they are exempted under Notification No. 3/99-ST dated 28.2.99 being a small service (rent-a-cab) provider - Service Tax along with interest has already been paid - fit case for re-consideration by the Commissioner of Central Excise regarding enhancement of penalty - impugned order is set aside and the matter is remanded to the Commissioner of Central Excise to decide afresh

Summary

Issues Involved: Appeal against enhanced penalties under Sections 76 and 78 of the Finance Act for non-payment of Service Tax based on exemption claim under Notification No. 3/99-ST.

Analysis:

1. Enhancement of Penalties: The appellant contested the penalty enhancement under Sections 76 and 78 of the Finance Act, claiming they had paid the Service Tax with interest. They argued that their non-payment was due to a bona fide belief in being exempted under Notification No. 3/99-ST as a small service provider. The appellant's CA was supposed to represent them before the Commissioner of Central Excise but failed to do so, resulting in an ex parte order. The appellant invoked Section 80 of the Finance Act to argue against the penalty. However, the respondent contended that the appellant did not appear before the adjudicating authority, failed to deposit the tax, and missed filing returns on time, justifying the imposed penalty.

2. Judgment and Remand: The Tribunal noted that no one appeared for the appellant before the Commissioner of Central Excise, and the CA's absence led to the ex parte order. Considering that the Service Tax, along with interest, had been paid, and the appellant genuinely believed in their exemption status, the Tribunal set aside the impugned order. The matter was remanded to the Commissioner of Central Excise for reconsideration, with an opportunity for the appellant to present their case. The decision to remand the case for fresh consideration was made in light of the circumstances and the appellant's payment of the tax amount.

3. Disposition: The appeal was disposed of by way of remand, emphasizing the need for the Commissioner of Central Excise to review the penalty enhancement issue in light of the appellant's genuine belief in exemption and the payment of the Service Tax. The Tribunal's decision aimed to ensure a fair hearing for the appellant and a proper reconsideration of the penalty imposition based on the circumstances presented during the appeal.

This detailed analysis of the judgment highlights the key arguments, considerations, and the Tribunal's decision to remand the case for fresh adjudication, providing a comprehensive understanding of the legal issues involved in the appeal against the enhanced penalties under the Finance Act.