2010 (5) TMI 83 - AT - Service Tax

Penalty plea that assessee was not aware of the law - No plea as regards imposition of penalty was raised before the Tribunal and dealt with. Appeal by assessee rejected

Summary

Issues:
Confirmation of service tax on 'Mandap Keepers' services, imposition of penalties under Sections 76, 77 of the Finance Act, 1994, challenge regarding awareness of the law and collection of amounts from customers, lower authorities' decision in the second round of litigation, invocation of Section 80 of the Finance Act, 1994.

Analysis:
The judgment by the Appellate Tribunal CESTAT, Ahmedabad, involved the confirmation of service tax on 'Mandap Keepers' services and the imposition of penalties under Sections 76 and 77 of the Finance Act, 1994. The lower authorities had confirmed a service tax amount along with penalties. The appellant did not challenge the duty confirmation and had already deposited the amount along with a portion of the penalty. The challenge was primarily based on the lack of awareness of the law and the assertion that they had not collected any amounts from their customers.

During the proceedings, the appellant argued that penalties under Sections 76 and 77 should not apply due to their lack of knowledge regarding the law and the non-collection of service tax from customers. However, the learned SDR contended that ignorance of the law is not a valid excuse, emphasizing that the obligation to pay service tax does not hinge on the actual collection of the tax from customers.

The Tribunal noted that the impugned order was issued in the second round of litigation, following a remand for the recalculation of service tax based on the commission received from decorators. The matter of penalty imposition was not raised during the previous appeal. The Tribunal agreed with the learned SDR that the lower authorities correctly recalculated the duty amount as per the Tribunal's earlier decision. Consequently, the Tribunal found no justification for interfering with the penalty imposed in the present case, leading to the rejection of the appeal.

In conclusion, the judgment highlighted the importance of compliance with tax laws, irrespective of the awareness or collection of taxes from customers. The decision underscored the binding nature of previous tribunal rulings and upheld the penalty imposition by the lower authorities in line with the applicable provisions of the Finance Act, 1994.