2017 (6) TMI 717 - AT - Service Tax

Penalty u/s 78 of FA - manpower recruitment and supply agency services - discharge of service tax liability along with interest before issuance of the SCN - Section 73(3) of the FA, 1994 - Held that - similar issue has been settled by the Hon ble High Court of Karnataka in the case of Adecco Flexione Workforce Solutions Ltd. 2011 (9) TMI 114 - KARNATAKA HIGH COURT , where it was held that Sub-Sec.(3) of Sec. 73 of the FA, 1994 categorically states, after the payment of service tax and interest is made and the said information is furnished to the authorities, then the authorities shall not serve any notice under Sub-Sec.(1) in respect of the amount so paid - the penalty imposed on the appellant u/s 78, which is equal to the service tax, needs to be set aside and is set aside. Penalty - commercial coaching and training services - short payment of tax - Held that - appellant has not produced any documents which would indicate that they had specifically billed and collected the value of the study materials supplied to the students. In the absence of any such evidence to show, the demand is confirmed. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Penalty under Section 78 for non-payment of service tax liability in manpower recruitment services and commercial coaching services.

Analysis:
The appeal revolved around the penalty imposed under Section 78 of the Finance Act, 1994 for non-payment of service tax liability in two service categories: manpower recruitment agency services and commercial coaching and training services. The appellant had failed to discharge the service tax liability for both services during a specific period, leading to the issuance of a show-cause notice in December 2010. The lower authorities confirmed the demands raised for commercial coaching and training services as short paid and penalized the appellant under Section 78 for both services.

In the case of manpower recruitment and supply agency services, the appellant had paid the entire service tax liability along with interest before the issuance of the show-cause notice. The tribunal acknowledged the settled law by the Hon'ble High Court of Karnataka in a similar case and held that the penalty under Section 78, equal to the service tax, should be set aside in this scenario. Therefore, the penalty imposed on the appellant for manpower recruitment and supply agency services was deemed unjustified and set aside.

However, concerning the penalty imposed on the appellant for commercial coaching and training services, the tribunal found that the appellant failed to provide evidence demonstrating the billing and collection of study material charges from students. As the appellant was registered under this category since 2003 and lacked documentation supporting their case, the penalty for this service category was upheld. Consequently, the tribunal partially allowed the appeal by setting aside the penalty for manpower recruitment and supply agency services while upholding the penalty for commercial coaching and training services. The appeal was disposed of accordingly.