2019 (2) TMI 477 - AT - Service Tax

Classification of services - Site Formation and Clearance Services or mining services? - period July 2005 to March 2007 - Held that - Similar issue came up before the Tribunal in the case of Ganta Ramanaiah Naidu vs. CCE Guntur (wherein one of us Shri M.V. Ravindran was a Member) 2010 (8) TMI 474 - CESTAT, BANGALORE an identical issue was argued and after reproducing various correspondence entered into with Coalfields by the appellant therein, the Bench held that the classification of services even if resolved at this juncture would be of a academic nature and did not record any findings; holding that having discharged the liability and the interest thereof, penalty is not to be imposed - the entire tax liability with interest has already been discharged. Penalty u/s 76, 77 and 78 - Held that - During the period in question, appellant herein may have entertained a bonafide that tax is not payable as per the correspondence with M/s Western Coalfields Limited, has made out the case for invoking section 80 of Finance Act, 1994 - penalties imposed under sections 76, 77 & 78 are set aside. Appeal disposed off.

Summary

Issues:
Classification of services rendered by the appellant during the period July 2005 to March 2007, imposition of penalties, overlapping period in show cause notices, invocation of Section 80 of the Finance Act, 1994.

Classification of Services Rendered:
The case involved two appeals filed by the assessee and Revenue against Order-in-Original No. 07/2009-ST. The appellant was accused of service tax liability under "Site Formation and Clearance Services" for different periods. The Adjudicating authority confirmed demands for one period but dropped proceedings for the other due to an overlap. The appellant argued that their activities pre-01.06.2007 were not under "Site Formation and Clearance Services" but under "mining services." The Tribunal referred to a similar case and held that since the tax liability was discharged, penalties should not be imposed.

Imposition of Penalties:
The appellant argued against penalties, citing a case where penalties were dropped due to classification issues. The Tribunal agreed that penalties under sections 76, 77 & 78 should be set aside as the appellant had a bona fide belief that tax was not payable, as evidenced by correspondence with a coal company.

Overlapping Period in Show Cause Notices:
The Tribunal noted an overlap in the show cause notices issued to the appellant but also found that a specific period was not covered in the earlier notices. Therefore, the demands dropped due to the overlap were upheld, and the Revenue's appeal on this issue was rejected. The penalties imposed on the Revenue were also set aside invoking Section 80 of the Finance Act, 1994.

Invocation of Section 80 of the Finance Act, 1994:
The Tribunal invoked Section 80 of the Finance Act, 1994, to set aside penalties imposed on both the appellant and the Revenue. It was held that the appellant's belief regarding tax liability and the Revenue's oversight in the show cause notices justified the invocation of this provision.

In conclusion, both appeals were disposed of with the classification of services, penalties, and overlapping period issues addressed comprehensively. The Tribunal upheld demands for the period not covered by the overlapping notices and set aside penalties using Section 80 of the Finance Act, 1994, for both the appellant and the Revenue.