2009 (12) TMI 166 - AT - Service Tax

Mandap keeper services- The appellant had facilitated renting of party plot on commission basis. However department demanded service tax from them on the ground that they were rendering mandap keeper service and the appellant also paid the full amount of service tax with interest before issuance of show-cause notice. Further, 25 per cent of the service tax was also deposited towards penalty within 30 days of the adjudication order. Held that- the appellant did not contest the service tax liability but deposited the same and also paid 25 per cent of the service tax as penalty, shows that the appellant is not interested in litigation but would like to abide by the law. Under these circumstances, a lenient view as regards penalty is called for and, accordingly, I allow the appeal by invoking section 80 of Finance Act, 1994 and set aside the impugned order as regards penalty under section 76 of Finance Act, 1994.

Summary

Issues:
1. Service tax liability for facilitating renting of party plot.
2. Penalty under section 76 of Finance Act, 1994.
3. Applicability of CBE&C letter F.No. 137/167/2006-CX-4.
4. Invocation of section 80 of Finance Act, 1994 for penalty waiver.

Analysis:

Service Tax Liability:
The appellants facilitated renting of a party plot on a commission basis, leading to a demand for service tax by the department on the grounds of rendering mandap-keeper service. The appellant paid the full amount of service tax with interest before the issuance of a show-cause notice. The Chartered Accountant representing the appellant acknowledged that the duty liability itself was not contested during the proceedings, despite the possibility of arguing that they were only providing business auxiliary services. The appellant's compliance with depositing the full service tax amount and interest before the show-cause notice was highlighted, along with the penalty payment of 25 per cent within 30 days of the adjudication order.

Penalty under Section 76:
The appeal primarily revolved around the penalty under section 76 of the Finance Act, 1994. The Tribunal considered the appellant's actions, noting that they did not contest the service tax liability but instead chose to pay the amount and the penalty. This indicated the appellant's willingness to comply with the law and avoid litigation. Consequently, a lenient view was taken, and the penalty under section 76 was waived by invoking section 80 of the Finance Act, 1994.

CBE&C Letter and Pre-Deposit Requirement:
The Chartered Accountant referred to CBE&C letter F.No. 137/167/2006-CX-4, dated 3-10-2007, which stipulated that once service tax with interest and penalty were deposited within 30 days of the adjudication order, the proceedings should be considered completed, requiring no further action. Based on this provision, the Tribunal waived the pre-deposit requirement and proceeded to take up the appeal for final disposal, focusing solely on the penalty under section 76.

In conclusion, the Tribunal acknowledged the appellant's compliance with the tax payment and penalty, emphasizing their intent to adhere to legal obligations. By invoking section 80 of the Finance Act, 1994, the Tribunal waived the penalty under section 76, considering the circumstances and the appellant's approach towards resolving the matter.