2018 (11) TMI 1293 - AT - Service Tax

Penalty - Levy of Service Tax in dispute - Tour operator service - non-payment of service tax - it was alleged that appellant had earned income from the supply of vehicles for tourist purpose and the appellant has not paid the service tax on said taxable service - Held that - The appellant has not collected the service tax from the customers and more over the levy of service tax on tour operators services was challenged before the High Court during the relevant time and it was finally decided on 22/09/2006 - the appellant had a bona fide belief and reasonable cause for non-payment of service tax but subsequently they have paid the service tax and also the interest. Appellant is entitled to waiver of penalty under Section 80 of the Finance Act - appeal is allowed to the extent of dropping the penalty.

Summary

Issues:
1. Appeal against the order rejecting appellant's appeal regarding service tax on tour operator services.
2. Demand of service tax on taxable services provided by the appellant.
3. Challenge to the sustainability of the impugned order.
4. Barred by limitation due to non-collection of service tax.
5. Payment of service tax and deposition under Section 35F of Central Excise Act, 1944.
6. Request for setting aside penalties due to no suppression of facts.
7. Interpretation issues regarding tour operator services.
8. Entitlement to waiver of penalty under Section 80 of the Finance Act.

Analysis:
The appeal was filed against the order rejecting the appellant's appeal concerning the levy of service tax on tour operator services. The appellant, registered under Service Tax as a tour operator, had not paid service tax on taxable services provided. The High Court had previously held the services taxable. The Anti-Evasion Wing confirmed a demand for service tax from April 2000 to October 2003, with short payments until March 2006. The appellant argued that the demand was time-barred due to non-collection of service tax and previous litigation. The appellant had paid the service tax and deposited an additional amount under Section 35F of the Central Excise Act, 1944. The appellant sought to set aside penalties, citing no suppression of facts and ongoing High Court proceedings related to confusion over service tax on tour operators.

Upon review, the tribunal noted that the appellant had not collected service tax from customers and had a genuine belief for non-payment due to ongoing legal challenges and subsequent payment of tax and interest. Citing a relevant High Court judgment, the tribunal granted a waiver of penalty under Section 80 of the Finance Act, as penalties were not imposable in cases of non-payment due to reasonable causes. Consequently, the appeal was allowed, dropping the penalty imposed.

This detailed analysis covers the issues raised in the appeal, the background of the case, arguments presented, and the tribunal's decision based on legal principles and precedents cited during the proceedings.