2008 (9) TMI 181 - AT - Service Tax

Penalty - rent-a-cab services - vehicle rented but service tax not collected - it is noted that after receipt of the show cause notice, they have deposited the entire amount of tax with interest - no mala fide intention in making the late payment of Service Tax ignorance about levy of Service Tax - respondent is a lady entrepreneur acted in bona fide manner - Section 80 of the Finance Act, 1994 is rightly invoked by Commissioner in waiving penalty imposed u/s. 75A, 77 and 78

Summary

Issues:
1. Liability of service tax on rent-a-cab services provided without collecting tax.
2. Imposition of penalties under Sections 78, 75A, and 77 of the Finance Act, 1994.
3. Application of Section 80 of the Finance Act, 1994.

Analysis:

1. The Respondent, engaged in providing rent-a-cab services, had provided services to M/s. Northern Coal Fields without collecting service tax under a contract for the financial years 2000-01 to 2003-2004. Upon receiving a show cause notice, the Respondent deposited the tax amount along with interest. The Adjudicating Authority confirmed the tax demand and imposed penalties. However, the Commissioner (Appeals) observed that the Respondent had no mala fide intention and acted in good faith, being unaware of the service tax provisions due to lack of information from M/s. Northern Coal Fields. The Commissioner (Appeals) set aside the penalties, citing the Respondent's ignorance and lack of mala fide intent.

2. The main contention raised by the ld. DR was that ignorance of the law cannot justify setting aside the penalties, relying on Tribunal decisions. However, the Commissioner (Appeals) considered the circumstances, noting the Respondent's prompt payment of interest upon receiving the show cause notice and the lack of awareness regarding service tax provisions, especially as M/s. Northern Coal Fields did not inform them about the tax levy. The Commissioner (Appeals) found the Respondent, a lady entrepreneur, to have acted in good faith, leading to the invocation of Section 80 of the Finance Act, 1994.

3. The Tribunal, after reviewing the Commissioner (Appeals) order, found no reason to interfere, upholding the application of Section 80 in the present case. Consequently, the appeal filed by the Revenue was rejected, affirming the decision to set aside the penalties imposed under Sections 78, 75A, and 77 of the Finance Act, 1994. The judgment was pronounced on 11.09.2008, emphasizing the importance of good faith and ignorance in determining liability and penalties in tax matters.