2017 (1) TMI 928 - AT - Service Tax

Imposition of penalty - Mandap Keeper service - contest of penalties on the ground that the appellant have already discharged the service tax liability on being pointed out by the audit party - Held that - once appellant has accepted the short payment of the duty as pointed out by the audit party and discharged the tax liability and interest thereof, he also having taken a ground they were in confusion how the discharged of service tax under this category due to various interpretation, a lenient view should have been taken - It was also pointed out by the appellant before the adjudicating authority due to misunderstanding and lack of guidance they did not obtain the certificate under Goods Transport Agency/Mandap Keeper Services they could not discharge the tax liability - the appellant has made out a case for setting aside the penalties imposed by the adjudicating authority under Section 77 and 78 of Finance Act, 1994, we set aside the penalty of ₹ 5000/- and ₹ 15,19,448/- imposed by the adjudicating authority on the appellant. As regards the penalty of ₹ 2000/- per return under Section 77 read with Rule 7C of Service tax Rules, we find that this penalty needs to be upheld. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues: Service tax liability on Mandap Keeper Service, Penalties under Section 77, 78, and Rule 7C of Service Tax Rules

In this case, the appellant contested penalties imposed for non-payment of service tax liability under the category of Mandap Keeper Service. The show-cause notice initially cited short payment of tax, later amended to non-payment. The appellant rectified the short payment upon audit findings. The adjudicating authority confirmed the demands and imposed penalties under Section 77, 78, and Rule 7C of the Service Tax Rules. The appellant argued they rectified the tax liability upon audit notification. The Departmental Representative contended that the appellant's failure to obtain registration or file ST-3 returns warranted penalties under Section 78 for non-disclosure of taxable services and non-payment of tax under self-assessment. The Tribunal noted the undisputed short payment rectified by the appellant post-audit. The appellant cited confusion due to various interpretations, lack of guidance, and intention to pay tax evidenced by a payment of &8377;41 lakhs without proper account details. Considering these factors, the Tribunal set aside penalties under Section 77 and 78 but upheld the &8377;2000 per return penalty under Rule 7C of Service Tax Rules.

Therefore, the Tribunal found in favor of the appellant, setting aside penalties under Section 77 and 78 while upholding the penalty per return under Rule 7C of Service Tax Rules. The appeal was disposed of accordingly.