2017 (5) TMI 1258 - AT - Service Tax

Penalty - non-payment of tax - supply of tangible goods service - Business Support Service - Held that - The supply of tangible goods service was introduced with effect from 16.5.2008 and the Business Support Service was introduced with effect from 1.5.2006 - the demand for service tax in this case has arisen for the periods immediately after the introduction of these two services when the activities covered under these services were being debated and settled by various judicial forum - during the course of investigation they were convinced and they have discharged the entire service tax liability along with interest - this is a fit case to waive all the penalties under the provisions of section 80 - appeal rejected - decided against Revenue.

Summary

Issues:
Classification of services provided by the respondent under Service Tax law; Imposition of penalty under various sections of Finance Act, 1994.

Classification of services provided by the respondent under Service Tax law:
The respondent supplied aircraft/helicopter on chartered hire along with their own crew and additional services like Y/A clearance, ATC clearance, DGCA clearance, handling, and technical support. The Commissioner classified the supply of aircraft under taxable service of "supply of tangible goods for use" and other services under "Business Support Service." The demand of Service Tax was confirmed along with interest, and Cenvat credit was allowed. The Revenue appealed, arguing that penalties should be imposed due to non-payment within the stipulated time. The Tribunal upheld the classification and confirmed the demand, noting that the entire Service Tax amount had been paid by the respondent. The Tribunal found it unnecessary to impose penalties, considering the circumstances and the respondent's compliance during the investigation.

Imposition of penalty under various sections of Finance Act, 1994:
The Revenue contended that penalties should be imposed as the demand was confirmed using the suppression clause of Section 73, requiring payment within one month of the show cause notice. The adjudicating authority refrained from imposing penalties, citing the respondent's voluntary payment of the outstanding Service Tax amount along with interest, demonstrating good faith. The authority referred to relevant case laws and statutory provisions to support the decision. The Tribunal agreed with the adjudicating authority, emphasizing that the respondent had paid the entire Service Tax liability voluntarily after disputing the classification initially. Therefore, the Tribunal upheld the impugned order, rejecting the Revenue's appeal and waiving all penalties under Section 80.

This judgment clarifies the classification of services under Service Tax law and the circumstances under which penalties may be imposed, emphasizing the importance of voluntary compliance and good faith in tax matters.