2006 (3) TMI 4 - AT - Service Tax

Service Tax Photography service (1) Service tax with interest (2) Extra Ordinary Tax Payer Friendly Scheme (3) Penalty

Summary

Issues:
1. Penalty enhancement under Section 76 of the Finance Act based on Order-in-Review by the Commissioner of Central Excise, Jaipur.

Analysis:
The judgment involves four appeals arising from an Order-in-Review by the Commissioner of Central Excise, Jaipur, which increased the penalty under Section 76 of the Finance Act on the appellant. The appellant, a service provider registered under the photography service category in 2001, failed to file returns or pay service tax initially. After self-discharging the service tax liability for the disputed period in 2003 along with interest, show cause notices were issued for penalty imposition under Sections 76 and 77 of the Finance Act. The Asst. Commissioner adjudicated and imposed penalties, which the appellant later discharged. Subsequently, the Commissioner reviewed the Asst. Commissioner's orders and raised the penalties significantly for each appeal.

The appellant's advocate argued that as the service tax and interest were paid before the show cause notices, no penalty should be imposed, citing a Tribunal decision and the Extraordinary Tax Payer Scheme Circular. The advocate also referenced another case supporting the appellant's position. Conversely, the Departmental Representative contended that the Commissioner rightfully enhanced the penalties under Section 76, emphasizing that the minimum penalty was applicable, not the maximum. The Departmental Representative argued against granting the appellant benefits under the Extraordinary Tax Payer Friendly Scheme, stating it was not applicable as the scheme targeted unregistered individuals.

After considering both parties' submissions, the judge found that the appellants had paid the service tax and interest before the show cause notices and had also settled all penalties imposed by the Asst. Commissioner. The judge agreed with the appellant's reliance on the Extraordinary Tax Payer Friendly Scheme and cited a previous Tribunal decision where penalties were set aside for timely service tax payments. Therefore, the judge concluded that the appellant's case aligned with the precedent, and the Commissioner's penalty enhancements were unwarranted. Consequently, the judge set aside the Commissioner's order and allowed the appeals.