2016 (6) TMI 317 - AT - Service Tax

Imposition of penalty - Section 76, 77 and 78 of the Finance Act, 1994 - Business Auxiliary Service - Service of billing, cash collection etc. were rendered for a statutory body under Government of Rajasthan as per the terms of contract - Held that - the appellants are small individual businessman providing service to a statutory corporation coming under Government of Rajasthan, and also considering the plea that the appellants acted in a bonafide manner in line with similarly placed contractors, therefore, this is a fit case for invoking the provision of Section 80 to waive the penalties imposed on the appellants. - Decided in favour of appellants

Summary

Issues:
1. Recovery of service tax under Business Auxiliary Service category.
2. Imposition of penalties under Section 76, 77, and 78.
3. Appeal against the appellate order of Commissioner, Customs & Central Excise.

Analysis:
1. The case involved two appellants engaged in providing services to a statutory body under the Government of Rajasthan. The original authority confirmed a service tax demand against them and imposed penalties under various sections of the Finance Act, 1994. The Commissioner (Appeals) upheld the orders, leading the appellants to file an appeal before the Tribunal. The service tax liability was not contested in the appeals, with the focus being on challenging the penalties imposed.

2. The appellants argued that they were unaware of the complexities of the service tax law, were unemployed, and took up the work without any intention to evade tax willfully. They also contended that the services were provided to a statutory body under the Government of Rajasthan as per the contract terms. On the other hand, the authorized representative for the respondent pointed out that the non-payment was brought to notice after an inquiry by the department, suggesting no merit in the appellants' plea.

3. During the proceedings, the appellants did not appear in person but submitted a letter requesting a decision on merits and the waiver of imposed penalties. Considering the submissions from both sides, the Tribunal acknowledged that the appellants were small individual businessmen providing services to a statutory corporation under the Government of Rajasthan. The Tribunal found merit in the appellants' argument that they acted in good faith similar to other contractors in a similar position. Consequently, invoking the provision of Section 80, the Tribunal decided to waive the penalties imposed on the appellants, allowing the appeals only to the extent of penalties.

This judgment highlights the importance of considering the circumstances and intentions of the parties involved in tax-related matters, especially when penalties are imposed. It also underscores the significance of invoking relevant legal provisions to provide relief in cases where the taxpayers acted in good faith despite unintentional non-compliance with tax laws.