2009 (7) TMI 354 - AT - Service Tax

Failure to pay service tax wilful mis-statement or fraud intent to evade respondents was engaged by M/s. Mukand Limited for raising of iron ores from Mines, Processing them to the required grade and supplying the same to principal - original authority found that during the period 16-6-2005 to 31-12-2005, the respondents had provided Business Auxiliary services to M/s. Mukand Ltd. by undertaking the above activity - Vide the impugned order, the first appellate authority found that no service tax was payable for the service rendered prior to 16-6-2005 and remanded the matter to the adjudicating authority to determine the exact tax liability - We observe that the original authority found that respondent had contravened provisions of law but were not guilty of fraud or collusion or willful misstatement with ma/a fide intention to evade payment of service tax impugned order setting aside penalty under Section 76 and 77, is justified - We find that in the instant Case, the activity undertaken by the appellants is essentially Mining Service which became taxable with effect from 1-6-2007. Therefore the appellants are not liable to pay service tax on the impugned activity under the category Business Auxiliary Service during material period Revision order imposing penalty under section 78, not sustainable

Summary

The appellate tribunal CESTAT, Bangalore, in the 2009 case of 2009 (7) TMI 354 - CESTAT, Bangalore, heard two appeals, one by the Revenue and the other by M/s. SVM Nett Project Solutions (P) Ltd. The Revenue appealed against the vacation of interest and penalties imposed on SVM for service tax evasion, while SVM appealed against a penalty imposed under Section 78 of the Act. The tribunal found that SVM was not guilty of fraud or collusion and therefore not liable for penalties under Sections 76 and 77 of the Act. The tribunal also concluded that the impugned activity was not classifiable under Business Auxiliary Service and therefore the demand for service tax was not sustainable. The penalties imposed on SVM were set aside and the appeal allowed. The Revenue's appeal was rejected. The tribunal's decision was based on various judicial authorities cited in the case.