2018 (10) TMI 1206 - AT - Service Tax

Security Services - Service tax was collected from clients but was not paid - Benefit of reduced penalty - Held that - Hon ble Supreme Court in the case of Commissioner of Central Excise & Customs V/s R. A. Shaikh Paper Mills Pvt. Ltd. 2016 (4) TMI 1076 - SUPREME COURT has dealt with an identical situation and referring to the Board s Circular dated 22.05.2008, has observed that in this case there was no mention of reduced penalty under Section 11AC of the Central Excise Act in the Order-In-Original, the order of the High Court allowing benefit of reduced penalty subsequently is not required to be interfered with. The option is extended to the assessee to deposit the entire duty along with interest & 25 % of the penalty imposed upon them within a period of 30 days from the date of receipt of the order in which case penalty shall stand reduced to 25% - appeal disposed off.

Summary

Issues:
Demand of Service Tax confirmation under 'Security Services' category for the period 2006-07 to 2010-11, imposition of penalty under Section 78 of the Finance Act, 1994, challenge to penalty amount, interpretation of Tribunal's decision in Rishabh Travels case, applicability of Supreme Court decision in R. A. Shaikh Paper Mills case, option for reduced penalty, compliance with Section 11AC provisions.

Analysis:
The judgment by the Appellate Tribunal CESTAT ALLAHABAD dealt with the confirmation of a demand for Service Tax amounting to ?1,12,83,601 under the category of 'Security Services' for the period 2006-07 to 2010-11. The Adjudicating Authority observed that the appellants had provided the services but failed to pay the service tax, despite collecting it from clients, leading to the imposition of a penalty equal to the confirmed tax amount under Section 78 of the Finance Act, 1994.

The appellant, represented by a Learned C.A., did not contest the service tax and interest but sought a reduction in the penalty to 25% of the imposed amount. Citing the Tribunal's decision in the Rishabh Travels case, it was argued that if the Adjudicating Authority did not offer the option to pay a reduced penalty within 30 days, higher authorities could provide such an option. The Tribunal considered the Hon'ble Supreme Court's ruling in the R. A. Shaikh Paper Mills case, which emphasized the mandatory mention of reduced penalty provisions under Section 11AC in the order itself by the Adjudicating Authority.

In light of the Supreme Court decision, the Tribunal extended the option to the assessee to deposit the entire duty, interest, and 25% of the penalty within 30 days from the order's receipt, resulting in a penalty reduction to 25%. The appeal was disposed of accordingly, providing clarity on the interpretation of Section 11AC provisions and the applicability of reduced penalties as per legal precedents.

This comprehensive analysis of the judgment showcases the meticulous consideration given to the issues of service tax demand, penalty imposition, interpretation of legal provisions, and the application of relevant case law to ensure a fair and just decision in the matter.