2018 (8) TMI 488 - AT - Service Tax

Outdoor Caterer Services - it was alleged that appellant have not discharged the service tax in respect of services provided to M/s IOCL Gujarat refinery and M/s IPCL, Dahej - Held that - As regards, the service tax liability upon the appellant, there is absolutely no dispute and the appellant is liable to pay, hence the Service Tax demand confirmed in the impugned order is not under dispute - the demand of service tax and interest there on upheld. Penalty - Held that - The appellant despite obtaining the registration in 2005 did not discharge the service tax only on the reason stated by the Ld. Counsel that the appellant were not reimbursed the service tax amount by the service tax recipient - merely for this reason, the appellant cannot be absolved from the liability of payment of service tax. Therefore, this lame excuse does not help the appellant - the appellant could not make out any case for waiver of penalties under section 80. However, the penalties under different sections 76 and 78 of Finance Act, 1994 shall not be imposed simultaneously, thus, penalty u/s 76 set aside, while upholding penalty u/s 78. Appeal allowed in part.

Summary

Issues involved:
1. Service tax liability of the appellant for outdoor catering services provided to specific companies.
2. Non-payment of service tax leading to penalties under sections 70, 76, 77, and 78.
3. Dispute regarding penalties imposed and their waiver based on the appellant's reasons and legal precedents cited.
4. Consideration of the service tax liability independent of reimbursement by service recipients.
5. Applicability of penalties under different sections of the Finance Act, 1994.

Analysis:
The case involved an appellant engaged in providing outdoor catering services, facing a demand for service tax amounting to ?1,01,28,205, along with interest and penalties. The appellant contended that they were unaware of their tax liability and were not reimbursed by the service recipients, claiming lack of malafide intention. The appellant also argued against the penalties imposed under sections 70, 76, 77, and 78, citing the waiver provision under section 80 of the Finance Act, 1994 and relying on relevant court judgments.

The Revenue, represented by the Additional Commissioner, maintained that the penalties were rightly imposed due to the appellant's failure to pay service tax despite being aware of their liability. The Revenue emphasized the appellant's ongoing outstanding tax liability and opposed leniency based on the appellant's arguments. The Revenue supported their stance by referring to specific court judgments upholding penalties in similar cases.

Upon careful consideration, the Tribunal upheld the service tax demand and interest, as the liability was undisputed. The Tribunal rejected the appellant's argument of non-reimbursement by service recipients as a valid excuse for non-payment of service tax, emphasizing that the liability arises upon service provision, regardless of reimbursement. Citing a relevant court judgment, the Tribunal set aside the penalty imposed under section 76 of the Finance Act, 1994, while upholding the remaining penalties. The Tribunal modified the impugned order accordingly, partially allowing the appeal based on the specific judgment regarding penalties under different sections of the Act.

In conclusion, the Tribunal upheld the service tax demand and interest, rejected the appellant's excuses for non-payment, and partially allowed the appeal by setting aside one of the penalties imposed under the Finance Act, 1994. The judgment clarified the liability of service providers irrespective of reimbursement and highlighted the importance of adhering to tax obligations even in cases of non-reimbursement by service recipients.