2010 (5) TMI 93 - AT - Service Tax

Security Agency and Housekeeping-cleaning services services provided mainly to International Organizations i.e. UNO, UNICEF - Demand of service tax to the extent of around 27 Lakhs was raised against the appellant for the period 2002 to 2006. The Additional Commissioner while adjudicating the show cause notice, dropped the major part of demand by extending the benefit of Notification No. 16/2002-ST dated 02.8.2002. However, he confirmed an amount of Rs. 58,536/- along with imposition of penalty on the ground that appellant could not produce certificate showing that said services were rendered to the International Organizations. Subsequently, the appellant produced another certificate before Commissioner (Appeals), who reduced the demand to Rs. 30,852/-. Held that Since the benefit stand denied only on the ground that certificates showing providing of services to the International Organization have not been produced, penalty waived.

Summary

Issues:
1. Service tax demand against the appellant for the period 2002 to 2006.
2. Benefit of Notification No. 16/2002-ST dated 02.8.2002.
3. Imposition of penalty due to the unavailability of certificates showing services rendered to International Organizations.
4. Concession by the appellant regarding the missing certificates.
5. Justification for the imposition of penalty in the absence of certificates.
6. Decision on the penalty and service tax demand.

Analysis:
1. The appellant, a service tax provider under Security Agency and Housekeeping-cleaning services, faced a service tax demand of around 27 Lakhs for the period 2002 to 2006. The Additional Commissioner dropped a major part of the demand but confirmed an amount of Rs. 58,536 along with a penalty due to the appellant's inability to produce certificates showing services provided to International Organizations.

2. The Additional Commissioner extended the benefit of Notification No. 16/2002-ST dated 02.8.2002, resulting in a reduction of the demand to Rs. 30,852 after the appellant produced another certificate before the Commissioner (Appeals). However, the appellant admitted that the certificate related to the confirmed services could not be located despite their efforts.

3. The appellant argued that the missing certificates were a genuine mistake, leading to the denial of the benefit of the Notification. The appellant contended that since the duty had been paid and the amount was small, penalty imposition was unnecessary in the circumstances of the case.

4. The Tribunal agreed with the appellant's contention and confirmed the service tax demand as uncontested. Considering that the appellant provided services to International Organizations, which was acknowledged by lower authorities, the Tribunal found no justification for the penalty imposition based solely on the absence of certificates. Consequently, the penalty was set aside, and the stay petition and appeal were disposed of accordingly.