2007 (4) TMI 247 - AT - Service Tax

Non fulfillment of obligations - security guard appellant is not an educated person; he is not aware of the law both the service provider and service receiver are in remote area - submission that imposition of penalty is really causing hardship to his client - ignorance of newly introduced law moreover, duty demand is also very small - this really is a deserving case for applying the leniency provided under section 80 - demand of duty and interest is upheld but penalties are set aside

Summary

Issues: Appeal against service tax demand, imposition of penalty, applicability of leniency under section 80

Service Tax Demand:
The appeal was made against the order of the Commissioner (Appeals) upholding a service tax demand of Rs. 31,952 for services rendered by the appellant to a pharmaceutical company from April 2000 to April 2004. The appellant did not dispute the duty demand and interest already paid but argued that the penalty imposed was causing hardship due to being from a remote village and lacking awareness of the law. The Tribunal considered the appellant's background and ignorance of the law as reasons for non-compliance, noting the small scale of operations indicated by the demand amount. The duty and interest were confirmed as uncontested, but the penalties were set aside.

Imposition of Penalty:
The appellant's consultant argued that the penalty was causing hardship due to the appellant's background as an uneducated security guard from a remote village who was unaware of the law. The consultant cited a previous Tribunal judgment where penalties were reduced due to financial hardship claimed by the appellant. The Tribunal, considering the circumstances, found the appellant's case deserving of leniency under section 80, as the non-compliance was attributed to ignorance of the newly introduced law and the small scale of operations involved. Consequently, the penalties imposed on the appellant were set aside while confirming the duty and interest.

Applicability of Leniency under Section 80:
The Tribunal, in considering the appellant's circumstances of being from a remote area and lacking awareness of the law, found the case deserving of leniency under section 80. The Tribunal noted that the appellant's lack of knowledge regarding the newly introduced law led to non-compliance, and the small amount of duty demanded further supported the application of leniency. Therefore, while confirming the uncontested duty and interest, the penalties imposed on the appellant were set aside based on the leniency provided under section 80.