2008 (5) TMI 153 - AT - Service Tax

Pray for waiver of penalties imposed u/s 76 and 78 on the ground that the entire amount of tax was paid before adjudication and on the further ground that the earlier non-payment of tax was on account of a confusion which prevailed during the material period- question whether construction contractors were liable to pay service tax remained unsettled benefit of section cannot be given - appellants have not pleaded financial hardships taking lenient view, stay partly granted

Summary

Issues involved:
Confirmation of demand of service tax, imposition of penalties under Sections 76 to 78 of the Finance Act, 1994, waiver of pre-deposit and stay of recovery, confusion regarding liability to pay service tax by construction contractors, benefit of Section 80 of the Finance Act, 1994, lenient approach in directing pre-deposit.

Analysis:

The judgment by the Appellate Tribunal CESTAT, Chennai pertains to the confirmation of a demand of service tax amounting to over Rs. 3.33 lakhs against the appellants for the period between 2005 to April 2006 under Section 73 of the Finance Act, 1994. Additionally, penalties under Sections 76 to 78 of the Act were imposed on the appellants, with the penalty under Section 78 being the highest at Rs. 3,33,451. The lower authority confirmed these demands and penalties, leading to the appellants seeking a waiver of pre-deposit and stay of recovery based on the grounds that the entire tax amount was paid before adjudication of the case and that the non-payment earlier was due to a prevailing "confusion" regarding the liability to pay service tax by construction contractors during the relevant period.

The appellants argued that the question of whether construction contractors were liable to pay service tax remained unsettled during the period in question, referencing a Circular of the Board and a judgment of the Bombay High Court. However, as these references were not produced by the consultant, the Tribunal could not provide the benefit of Section 80 of the Finance Act, 1994 to the appellants at that stage. It was noted that the appellants did not plead financial hardships in their case.

In a lenient approach, the Tribunal directed the appellants to pre-deposit only an amount of Rs. 11,000 within four weeks, considering the circumstances and the arguments presented. The compliance was to be reported by a specified date following the pronouncement of the judgment. The decision was made after examining the records and hearing both sides, emphasizing the need for compliance with the directed pre-deposit amount within the stipulated timeline.