2018 (5) TMI 679 - AT - Service Tax

Penalties - Business Auxiliary Service - appellant had received an amount of ₹ 46,69,647/- for providing the said services to M/s. Mysore Paper Mills Ltd., for the period from 10/2009 to 9/2010 but did not discharge service tax on the same - Held that - the appellant has paid the tax along with interest - the Commissioner (A), Mysore in the similarly placed other assessees covered by the same Final Order has set aside the penalties imposed under Sections 76, 77 and 78 of the Finance Act, 1994 - penalties set aside - appeal allowed - decided in favor of appellant.

Issues:
1. Appeal against rejection by Commissioner (A) of appellant's appeal.
2. Tax liability for providing Business Auxiliary Services.
3. Demand of service tax, interest, and penalties imposed.
4. Challenge regarding penalties under various provisions of the Finance Act.
5. Comparison with similar cases where penalties were set aside.

Analysis:
1. The appeal was filed against the rejection of the appellant's appeal by the Commissioner (A), who confirmed the demand of service tax, interest, and penalties imposed by the Original Authority. The appellant challenged the penalties in the present appeal, having already paid the tax amount with interest. The appellant sought to drop the penalties imposed under Sections 70, 77, and 78 of the Finance Act, 1994.

2. The appellant was registered for providing Business Auxiliary Services and received payment for activities falling within this category. The demand for service tax was confirmed for a specific period, and penalties were imposed for non-disclosure in returns. The appellant contended that penalties should be dropped as they had paid the tax amount with interest, limiting the challenge in the appeal to the penalties imposed.

3. The Original Authority passed the Order-in-Original based on Tribunal directions to limit the demand to the normal period. The Commissioner (A) in similar cases set aside penalties under various sections of the Finance Act. The appellant argued that penalties should be dropped as per Tribunal directions and decisions in comparable cases. The appellant provided evidence of payment and challenged the penalties upheld in the impugned order.

4. The learned AR reiterated the findings of the impugned order, supporting the penalties imposed on the appellant. However, after considering submissions and records, the Judicial Member found that the appellant had only challenged the penalties and had paid the tax with interest. Citing precedents where penalties were set aside, the Judicial Member concluded that the penalties imposed on the appellant were not sustainable in law and allowed the appeal by setting aside the penalties under various provisions of the Finance Act.

5. The decision to set aside the penalties was based on the appellant's payment of tax with interest, Tribunal directions to limit the demand, and precedents where penalties were dropped in similar cases. The Judicial Member's ruling aligned with the findings of the Original Authority and the Commissioner (A) in comparable cases, leading to the appeal being allowed and penalties being set aside.

Conclusion:
The appeal was allowed, and the penalties imposed on the appellant under various provisions of the Finance Act were set aside, considering the payment of tax with interest, Tribunal directions, and precedents where penalties were dropped in similar cases.

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