2008 (2) TMI 205 - AT - Service Tax

Travel Agent - non-payment of Service Tax demand, interest & penalty - while paying tax, the appellant suppressed the value of high value tickets - only after departmental investigation the amount was paid - it cannot be said that there was no intention to evade Service Tax - taking into account the fact that the appellant paid the Service Tax even before the issue of show cause notice, we set aside the penalty under Section 76 and reduce the penalty under Section 78

Summary

Issues:
- Whether the appellant, a Travel Agent, is liable for non-payment of Service Tax.
- Whether penalties imposed under Section 76 and 78 of the Finance Act are justified.
- Whether the appellant's intention to evade Service Tax can be established.

Analysis:
1. The appellant, a Travel Agent, was accused of not paying Service Tax. The Adjudicating Authority confirmed the demand of Service Tax, interest, and penalties. The Commissioner (Appeals) upheld this decision, leading the appellant to appeal to the Tribunal for relief.

2. The appellant argued that due to stiff competition in the Air Travel Trade, high-value tickets were not considered, resulting in the alleged suppression of taxable service value. The appellant paid the entire due amount before the show cause notice was issued, contending that harsh penalties were unwarranted.

3. The Tribunal considered the arguments and evidence presented. It was noted that the appellant did suppress the value of high-value tickets while paying Service Tax. Despite the payment made before the show cause notice, the intention to evade tax could not be completely ruled out. However, considering the early payment, the penalty under Section 76 was set aside, and the penalty under Section 78 was reduced to Rs 1,00,000.

4. The appellant's representative argued that the Appellate Authority did not address the appellant's contentions adequately, and a fresh calculation of the tax was necessary. The appellant denied any intention to evade tax, attributing the discrepancies to competitive pressures in the industry.

5. The Departmental Representative maintained that the appellant had indeed evaded Service Tax, justifying the penalties imposed. The Tribunal carefully reviewed the evidence and arguments from both sides before reaching a decision on the penalties.

6. In conclusion, the Tribunal acknowledged the suppression of taxable value by the appellant but considered the early payment of tax before the notice. As a result, the penalty under Section 76 was waived, and the penalty under Section 78 was reduced significantly. The judgment was pronounced in open court, providing clarity on the Tribunal's decision.