2010 (1) TMI 144 - AT - Service Tax

Erection Commissioning & Installation services - It was observed after verification that the assessee had short paid service tax amounting to Rs.2, 41, 249/-. The Revisional authority has observed that the appellant has suppressed the taxable value during the relevant period which amounts to evasion of service tax and imposed penalties under Section 76 and 78 of the Finance Act 1994. - submitted that the appellants are having annual contract for maintenance of lighting in CHP Plant of MSEB and the annual contract for maintaining the service of erection commissioning and installation are not covered in the category of service Erection Commission and Installation . He further submitted that the appellant being illiterate person paid the service tax although he was not liable to pay the same. He further submitted that he has obtained the registration certificate from the Service Tax department under the category of maintenance or repair services. He was discharging service tax liability regularly. Held that as the appellant being a small contractor doing the work of annual maintenance of lighting in CHP Plant area is not aware of the legal provisions of the service tax and the appellant has paid the service tax without any protest. Accordingly I take lenient view and giving the benefit of Section 80 of the Finance Act 1994 Penalty set aside.

Summary

Issues:
Imposition of penalties under Section 76 and 78 of Finance Act, 1994 for non-registration and incorrect assessable value in service tax payment.

Analysis:
The appellant was penalized for providing services without registration and incorrect service tax payment. The Revenue found discrepancies in the payment of service tax related to 'Erection, Commissioning & Installation' services. The appellant was observed to have short paid service tax, leading to the imposition of penalties under Sections 76 and 78 of the Finance Act, 1994. The Revisional authority concluded that the appellant suppressed taxable value, resulting in service tax evasion.

The appellant contended that they had contracts for maintenance services not covered under 'Erection, Commission and Installation' services. Despite being illiterate, the appellant paid service tax as requested by the department, claiming ignorance of liability. The appellant held a registration certificate for maintenance or repair services, regularly discharging service tax obligations. The appellant sought the benefit of Section 80 of the Finance Act, citing precedents where penalties were waived for small taxpayers.

During the appeal, the appellant focused on contesting the penalty rather than the service tax liability. The appellant's representative argued for leniency considering the appellant's status as a small contractor unfamiliar with service tax regulations. The tribunal acknowledged the appellant's lack of awareness and compliance efforts, granting relief under Section 80 of the Finance Act. Relying on relevant case law, the tribunal set aside the penalty, waiving the demand.

In the final judgment, the tribunal disposed of the appeal by waiving the penalty, considering the appellant's circumstances and compliance history. The decision highlighted the appellant's lack of knowledge regarding service tax laws and the mitigating factor of being a small contractor. The tribunal's ruling aligned with the principles of fairness and leniency towards taxpayers facing penalties due to inadvertent non-compliance.