2008 (11) TMI 193 - AT - Service Tax

Suppression of Facts waiver of pre deposit - appellant who rendered Advertising Services to various government departments was under the bona fide belief that they would not be liable for service tax. In any case, all the services were rendered only to the government departments. These details have been mentioned in their balance sheet stay granted partly

Summary

Issues: Determination of service tax liability for the period from April 2002 to March 2007, imposition of penalties under Sections 76, 77, and 78 of the Finance Act, invocation of proviso to Section 73, suppression of facts, exemption from service tax for advertising services to government departments.

Analysis:

1. Service Tax Liability and Penalties: The appellant was required to pre-deposit a specific amount towards service tax liability and education cess for the mentioned period, along with interest at the appropriate rate under Section 75 of the Finance Act. Additionally, penalties were imposed under Sections 76, 77, and 78 of the Finance Act. The appellant contended that they believed they were not liable for service tax due to services rendered only to government departments, with no suppression of facts. The Adjudicating Authority invoked a deleted provision, which the appellant argued was incorrect at that time, citing relevant case laws.

2. Invocation of Proviso to Section 73: The appellant argued that the proviso to Section 73 was not invoked in the show cause notice, indicating that a longer period could not have been invoked. However, the Departmental Representative asserted that the proviso was indeed invoked and highlighted the lack of information provided by the appellants regarding the services rendered and the burden of service tax on government departments.

3. Decision and Order: Upon careful consideration, the Tribunal found that the show cause notice did invoke the proviso to Section 73. It was noted that there was no exemption from service tax for advertising services provided to government departments. While the merits of the case would be examined in detail during the final hearing, the Tribunal ordered a pre-deposit of a specified sum within a set timeframe. Upon compliance with the pre-deposit, the balance amount of service tax, interest, and penalties would be waived until the appeal's disposal, with a compliance report due on a specified date for further proceedings.

This detailed analysis of the judgment from the Appellate Tribunal CESTAT, Bangalore addresses the various issues involved, the arguments presented by both parties, and the Tribunal's decision regarding the pre-deposit and waiver of amounts pending the appeal's final disposal.