2009 (9) TMI 273 - AT - Service Tax

Penalty- Reasonable cause- The assessee was providing manpower recruitment and supply agency s service during the period June, 2005 to December, 2006. The adjudicating authority held that service tax on the service tax on the said services rendered by an individual was payable only w.e.f. 1.5.2006 and, accordingly, confirm service tax liability on the assessee along with interest and imposed penalties. Commissioner (Appeals) confirmed the service tax demand but set aside the penalty. Imposed under section 76, on the ground that once penalty had been imposed under section 78, there was no need to impose penalty had been imposed under section 78, there was no need to impose penalty under section 76. Held that- set aside the both penalty u/s 76 and 78.

Summary

Issues:
Liability to pay Service Tax on manpower recruitment and supply agency service, Penalty under sections 76, 77, and 78 of the Finance Act, 1994.

Liability to Pay Service Tax:
The appellant was issued a show-cause notice for non-payment of Service Tax on services rendered to a hotel. The adjudicating authority confirmed the applicable Service Tax from May 1, 2006, onwards. The ld. Commissioner (Appeals) modified the order, restricting the Service Tax demanded to a lower amount. The appellant challenged the penalties imposed under sections 77 and 78, not disputing the Service Tax demand. The issue revolved around the gross amount charged by the appellant to customers, with deductions for reimbursements. The Tribunal upheld the Service Tax liability based on the gross amount as per section 67, finding no need for interference.

Penalty under Section 78:
The appellant argued that being an individual, they were unaware of Service Tax provisions and requested invoking section 80 to set aside the penalty under section 78. The appellant contended that immediate payment after notice showed cooperation. The Tribunal agreed, considering the appellant's lack of awareness and sympathy towards their situation, setting aside the penalty under section 78 while upholding the penalty under section 77.

Penalty under Section 76:
The revenue challenged the setting aside of the penalty under section 76. The Tribunal held that the appellant's lack of awareness and prompt payment post-notice warranted setting aside the penalty under section 78, making the revenue's appeal against the penalty under section 76 untenable. The Tribunal upheld the penalties under section 77, rejected the revenue's appeal, and disposed of both appeals accordingly.

This judgment clarified the liability for Service Tax on specific services, considered the appellant's lack of awareness in penalty imposition, and upheld penalties under relevant sections while setting aside others based on the circumstances and legal provisions.