2008 (2) TMI 139 - AT - Service Tax

Appellants Air Travel Agents had not paid service tax on the entire value of the air tickets booked by them appellants had not paid service tax in respect of the tickets booked by them for Hajj pilgrims. However it is seen that most of the amounts had been paid before the issue of SCN & balance amount has been paid even before the Order-in-Original has been issued - no suppression of facts with an intend to evade payment of duty penalty set aside but interest is payable

Summary

Issues:
1. Liability to pay service tax on air tickets booked by Air Travel Agents.
2. Allegations of non-payment of service tax and suppression of facts.
3. Imposition of penalties under Section 78 of the Finance Act, 1994.

Issue 1: Liability to pay service tax on air tickets
The appellants, M/s. Akbar Travel, registered as Air Travel Agents, were found liable to pay service tax on air tickets booked by them. They contended that they were informed that service tax need not be collected for Hajj pilgrims, leading to non-payment for this category. However, the Revenue argued that service tax was not paid for other ticket categories as well, alleging suppression of the tax value.

Issue 2: Allegations of non-payment and suppression of facts
Upon careful consideration, it was established that the appellants had indeed not paid service tax for Hajj pilgrims initially. However, a significant portion of the due amount was paid before the show cause notice and the rest before the Order-in-Original. The appellants argued that the penalty was excessive and there was no intention to evade duty. The Tribunal acknowledged the payments made and found no deliberate suppression to evade payment.

Issue 3: Imposition of penalties under Section 78
After thorough evaluation, the Tribunal decided to take a lenient view considering the circumstances. They noted that the major portion of the service tax was paid before any formal notices were issued. Consequently, the penalties imposed under Section 78 of the Finance Act were set aside, and the appeals were allowed. However, the appellants were still held liable to pay interest on the outstanding amounts.

In conclusion, the Tribunal ruled in favor of the appellants, setting aside the penalties imposed under Section 78 of the Finance Act. They deemed it appropriate to consider the timely payments made by the appellants before any formal proceedings, thus allowing the appeals in the specified manner.