2008 (3) TMI 197 - AT - Service Tax

Appellants, PSUs are contesting the levy of Service Tax on the ground that they are exempted by Notification No. 3/1994 appellants plea is acceptable - appellants have already deposited the majority of the amount and the balance amount could come within the exempted category - Therefore, the plea for waiver of balance of deposit of tax, penalty and interest is acceptable. The stay application is allowed

Summary

Issues:
Contesting Service Tax liability on PCUs based on exemption notification; Seeking waiver of balance duty amount, interest, and penalty; Imposition of Service Tax under various categories; Pleas for non-imposition of interest and penalty.

Analysis:
The judgment by the Appellate Tribunal CESTAT Bangalore involved the appellant, a PSU Unit, contesting a Service Tax liability of Rs. 2,98,710. The appellant had already paid Rs. 49,46,121 along with interest of Rs. 20,68,860. They sought a waiver of the remaining duty amount, interest of Rs. 3,52,885, and penalty of Rs. 52,44,831. The main contention was the levy of Service Tax on PCUs, claiming exemption under Notification No. 3/1994 dated 30-6-1994, along with disputing the tax under other categories. Both the appellant's counsel and the Commissioner presented detailed submissions, with the JCDR opposing the waiver request.

Upon examining Notification No. 3/1994, the Tribunal noted exemptions for certain activities, including PCUs. Considering the appellant's substantial payments and the possibility of the remaining amount falling under the exempted category, the Tribunal accepted the plea for waiving the balance tax, penalty, and interest. The Tribunal granted a stay on the recovery of the remaining amount until the appeal's disposal, following precedents from the Apex Court, High Court, and Tribunal rulings. The judgment allowed the appeal to proceed accordingly without recovery even after 180 days.

In conclusion, the Tribunal's decision favored the appellant by acknowledging the exemption possibility under the notification and granting a waiver on the remaining tax liability, penalty, and interest. The stay on recovery ensured no enforcement until the appeal's resolution, aligning with established legal principles from higher courts and tribunals.