2017 (1) TMI 164 - AT - Service Tax

Imposition of penalty u/s 78 - Classification of services - providing advertising services by erecting advertisements in the exhibition centres and collecting advertisement charges /sponsorship charges from customers - classified as Business Exhibition Service or advertising agency service? - Held that - the respondent is a society registered under Societies Act - That, therefore, there cannot be any intention on the part of Managing Committee to evade payment of service tax by reason of mis-statement - On going through the designation of Members in the Managing Committee of the respondent s society, I am convinced that the view taken by Commissioner (Appeals) is setting aside penalty is correct and proper - appeal dismissed - decided against appellant.

Summary

Issues:
1. Taxability of services provided by organizing exhibitions and advertising services.
2. Imposition of penalty under Section 78 of the Finance Act, 1994.
3. Intention to evade payment of service tax due to lack of registration.

Analysis:
1. The appellants were engaged in organizing exhibitions and providing advertising services by erecting advertisements in exhibition centers. A show cause notice alleged that the services provided fell under Business Exhibition Service, taxable from 10-09-2004. The appellants argued that the activities should be categorized as an advertising agency service, taxable from 01.06.2005. The Original authority confirmed service tax liability on services post 01-5-2006, imposing a demand of ?23,93,081 along with interest and penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The Commissioner (Appeals) upheld the tax liability but set aside the penalty under Section 78, leading the department to appeal against this decision.

2. The department contended that the penalty under Section 78 should not have been set aside as the appellant had not registered and thus had an intention to evade service tax payment. The Commissioner (Appeals) had set aside the penalty under Section 78, stating that there was no evidence of willful intention to evade tax payment. The department argued that the lack of registration indicated an intention to evade tax, leading to the appeal against the Commissioner (Appeals) decision.

3. Despite the absence of the respondent during the proceedings, the Tribunal considered the arguments and records. The Tribunal noted that the demand for the period before 10-09-2004 was set aside, but the liability for advertising services post 01-05-2006 was confirmed. The Commissioner (Appeals) highlighted that the respondent was a society with prominent members in the Managing Committee, indicating no intention to evade tax. The Tribunal agreed with the Commissioner (Appeals) that the penalty under Section 78 should be set aside based on the composition of the respondent's Managing Committee. Consequently, the Tribunal found no issues with the Commissioner (Appeals) decision and dismissed the appeal.

This detailed analysis of the judgment covers the taxability of services, imposition of penalties, and the intention to evade tax, providing a comprehensive understanding of the legal issues involved in the case.