2008 (3) TMI 143 - AT - Service Tax

Demand & penalty - Man Power Recruitment Agency Services - appellant is not a commercial concern but an individual and only providing labour - appellant comes under the scope of Service Tax only w.e.f. 16.6.05 when the person has been substituted in stead of commercial concern, therefore, there is no question of late filing of returns prior to this date - issue of late filing of returns for the period prior to this date requires reconsideration, so matter is remanded

Summary

Issues:
Challenge to penalties imposed under Section 76 and 77 of the Finance Act for Man Power Recruitment Agency Services. Appellant's contention of being an individual not liable to pay Service Tax before 16.6.05. Failure to file necessary returns and pay Service Tax on time. Lack of response to show cause notice by the appellant.

Analysis:
The appellant contested the penalties imposed under the Finance Act, arguing that the demand pertained to Man Power Recruitment Agency Services and that as an individual, they were not subject to Service Tax before 16.6.05. The appellant highlighted that the Finance Act was amended on 16.6.05, replacing "commercial concern" with "any person," thereby bringing them under the Service Tax ambit only from that date. The penalties were imposed due to late filing of returns and payment of Service Tax for the period from April 2005 to September 2005. The appellant's status as an individual providing labor was emphasized, and it was noted that the lower authority had not considered the impact of the legislative amendment on the timeline for compliance.

The Revenue contended that the appellant had not responded to the show cause notice or appeared before the adjudicating authority to present their case, justifying the demand made against them. However, the Tribunal found merit in the appellant's argument regarding the legislative change on 16.6.05, which shifted the liability to pay Service Tax from commercial concerns to individuals. Consequently, the Tribunal set aside the impugned order imposing penalties and remanded the matter to the adjudicating authority for a fresh decision on the penalty issue. The adjudicating authority was directed to reevaluate the penalty after providing the appellant with an opportunity to be heard, taking into account the revised understanding of the Service Tax liability based on the legislative amendment.

In conclusion, the Tribunal's decision to remand the matter for reconsideration by the adjudicating authority reflects a nuanced understanding of the legislative changes affecting the appellant's liability for Service Tax. By emphasizing the need for a fresh assessment in light of the amended provisions, the Tribunal ensured a fair opportunity for the appellant to present their case and have the penalty issue reviewed comprehensively.