2017 (9) TMI 997 - AT - Service Tax

Cargo Handling Services - Goods transport Agent Services - payment of tax with interest before issuance of SCN - penalty - Held that - there is no material on record which suggests that the appellant has an intention to evade the payment of tax as the appellant is a small time trader and during the relevant time service tax was newly introduced and he had a bona fide belief that he is not liable to pay the service tax but when it was pointed out by the department, he paid the service tax along with interest which shows his bona fide. Once the appellant has paid the entire service tax along with interest before the issue of SCN, he is not liable to pay the penalty under Section 78 and therefore, by giving him the benefit of Section 80 - penalty set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against impugned order dated 19.9.2013 passed by Commissioner (A)
- Upholding Order-in-Original except for certain aspects
- Demand for service tax under steamer agent service
- Penalty under Section 76 of the Finance Act
- Limiting penalty under Section 78

Analysis:
The appeal before the Appellate Tribunal CESTAT Bangalore challenged the order passed by the Commissioner (A) dated 19.9.2013. The Commissioner (A) had upheld the Order-in-Original, with exceptions. Notably, the demand for service tax amounting to ?61,036 under steamer agent service was set aside, along with the penalty under Section 76 of the Finance Act. However, the penalty under Section 78 was limited, leading to the present appeal.

The case involved the appellant, engaged in cargo handling services and goods transport agent services. Following a search at the appellant's premises and a statement recorded from a director of a related company, it was revealed that the appellant had not taken service tax registration or paid service tax for the services provided. Subsequently, the appellant paid the service tax liability for various services after the search, but a show-cause notice was issued, leading to the current appeal.

During the proceedings, the appellant argued that the impugned order was not legally sustainable, as they had voluntarily paid the service tax along with interest before the issuance of the show-cause notice. The appellant claimed they had a genuine belief that they were not liable to pay service tax initially, considering it was a newly introduced tax during the relevant period. The appellant sought relief from penalties under Section 78 and invoked the benefit of Section 80 of the Finance Act, citing relevant judicial precedents.

In response, the learned authorized representative reiterated the findings of the impugned order, opposing the appellant's contentions. After hearing both parties and examining the evidence, the Tribunal found no evidence of the appellant's intention to evade tax. Considering the circumstances, including the appellant's prompt payment of service tax upon realization of their liability, the Tribunal decided to drop the penalty under Section 78. The Tribunal granted the appellant the benefit of Section 80, ultimately allowing the appeal.

In conclusion, the Appellate Tribunal CESTAT Bangalore, through the judgment delivered by Shri S.S. Garg, Judicial Member, pronounced the operative portion of the order on 20/07/2017, providing relief to the appellant by dropping the penalty under Section 78 and granting the benefit of Section 80 under the Finance Act.