2009 (3) TMI 134 - AT - Service Tax

Maintenance & Repair Services, Commissioning and Installation Services and Testing, Inspection and Certificate Services Service Tax came into effect from 1.7.2003 assessee took registration and paid service tax from February 2005 service tax demanded along with interest and penalty held that - that the appellants did not respond to the various letters written by the authorities as regards the past transactions - We find that there is a categorical finding by the Adjudicating Authority that it took seven months for the appellant to declare their past liabilities. If it is the contention of the appellant that they were under bona fide impression, they should have declared their past transactions i.e., prior to obtaining the service tax registration to the authorities as soon as they received the first letter from the lower authorities demand of service tax with interest and penalty upheld.

Summary

Issues:
1. Appellants providing Maintenance & Repair Services, Commissioning and Installation Services, and Testing, Inspection and Certificate Services.
2. Failure to disclose past transactions before obtaining Service Tax registration.
3. Imposition of penalties for non-payment of Service Tax.

Analysis:
1. The case involves the appellant, a service provider, offering Maintenance & Repair Services, Commissioning and Installation Services, and Testing, Inspection and Certificate Services. The appellant obtained Service Tax registration in February 2005, although these services fell under the Service Tax net from 1-7-2003. The contracts for these services were executed with M/s. Hindustan Petroleum Corporation Ltd. The Adjudicating Authority demanded and confirmed Service Tax, interest, and penalties. The Commissioner (Appeals) upheld the order, noting the appellant's failure to disclose past transactions and delayed payment of Service Tax.

2. The appellant argued that they were under the impression that, being a Small Scale Industry (SSI) unit exempt from Central Excise, their services were also exempt from Service Tax. However, they belatedly paid the majority of the tax amount before the show-cause notice and the remaining balance during the adjudication proceedings. The appellant contended that penalties were unwarranted as they paid the entire amount before the notice was issued. The authorities emphasized the appellant's failure to register under 'Maintenance and Repair Services' for Service Tax provision.

3. The Tribunal found that the appellant did not respond promptly to authorities' inquiries about past transactions, taking seven months to declare past liabilities. The Tribunal upheld the Commissioner (Appeals) findings, stating that penalties were justified due to the delayed disclosure of past transactions and delayed payment of Service Tax. The appeal was rejected, and the impugned order was upheld, emphasizing the importance of timely compliance and disclosure in tax matters.