2009 (1) TMI 173 - AT - Service Tax

SCN was issued demanding service tax along with interest for the period 16.8.2002 to 31.11.05 and also proposed to impose penalty under Sections 76 77 and 78 - SCN was adjudicated by holding that there was no intention to evade service tax and lapse occurred due to lack of knowledge of the provisions - A fresh SCN was issued in November 2007 stating that since they suppressed the fact of providing convention services with intention to evade service tax Assistant Commissioner while passing the order-in-original has incorrectly exercised his discretion under Section 80 as no reasonable cause has been given by the assessee for his failure to pay service tax Held that that Commissioner has acted as adjudicating authority and not as a Revision authority as he has issued an O-I-O and not order-in-revision and the whole tenure of the order is determining of the issue afresh rather than revising the order order set aside.

Summary

Issues:
1. Imposition of penalty under Sections 76, 77, and 78 of the Finance Act, 1994 for non-payment of service tax on convention services.
2. Validity of the show cause notice issued by the Commissioner in exercise of Revisional power.
3. Allegation of suppression of facts with intent to evade duty.
4. Bona fide belief as a reasonable cause for non-payment of service tax.

Analysis:

1. The appellants were providing convention services but did not pay Service Tax on them, assuming they were not taxable. The Deputy Commissioner confirmed the duty and interest but refrained from imposing penalties under Sections 76, 77, and 78, citing lack of intention to evade service tax. However, the Commissioner, in a review, issued a fresh show cause notice alleging suppression of facts with intent to evade duty and imposed penalties under the mentioned sections.

2. The appellant argued that the show cause notice issued by the Commissioner exceeded the scope of the original notice and was improper. The Commissioner was accused of acting as an original authority rather than a Revision authority. The Tribunal's decisions in similar cases were cited to support the argument that the order needed to be quashed due to the improper show cause notice issued by the Commissioner.

3. The appellant contended that they were unaware that certain services fell under convention services, leading to non-payment of service tax out of ignorance. The Commissioner's order was criticized for not providing clear facts to support the conclusion of suppression with intent to evade duty. Various legal precedents were cited to argue that a bona fide belief could be considered a reasonable cause for non-payment of service tax.

4. The Department argued that the non-payment was a case of suppression of facts with intent to evade duty, as the service tax was paid only after detection by departmental officers during a search. However, the Tribunal found that the original show cause notice did not contain allegations of suppression with intent to evade duty. The Tribunal further noted that the Commissioner had acted as an adjudicating authority rather than a Revision authority, and the order was set aside, restoring the original order.

This detailed analysis covers the issues involved in the legal judgment comprehensively, outlining the arguments presented by both parties and the Tribunal's findings in each aspect of the case.