2009 (11) TMI 226 - AT - Service Tax

Rent a cab services- The assessee, a sole proprietorship concern, had provided rent a cab service to IFFCO during the period from October, 2000 to May 2002. The adjudicating authority order confirmed the demand of service tax along with interest against the assessee. He also imposed penalty. Held that- rent a cab service provided by any person was taxable whether or not it was provided by sole proprietorship concern. Therefore, there was no case for waiver of penalty by sole proprietorship concern. Therefore, there was no case for waiver of penalty by invoking section 80. Accordingly, the penalty under section 78 would be attracted. However, as the assessee had paid the entire amount along with interest prior to issue of SCN and since in the order in original issued by the adjudicating authority, the option to pay service tax along with interest with in 30 days time had not been given, the assessee would be eligible for reduced penalty first proviso to section 78. So far as imposition of penalty under section 76 was concerned. thus the matter is to e remand back.

Summary

Issues:
Service tax demand confirmation, imposition of penalties under sections 75A, 76, 77, and 78 of the Finance Act, 1994.

Analysis:
The appeal was filed against the order confirming a service tax demand and penalties imposed on the appellant. The appellant, a sole proprietorship providing rent-a-cab services, argued they were unaware of the service tax provisions and paid the tax amount promptly upon notification. The appellant contested the penalties, citing previous judgments and requesting the amount received from the client to be considered as cum-tax. The Department defended the penalties, stating no reasonable cause was shown for non-payment. The Tribunal noted the appellant's failure to register or pay service tax until detected by the Department, confirming the tax demand. The question of treating the client payment as cum-tax was remanded for further consideration.

Regarding penalties, the Tribunal distinguished the present case from previous judgments cited by the appellant, as there was no dispute that rent-a-cab services were taxable. The Tribunal upheld the penalty under section 78 but reduced it due to the appellant's early payment and lack of a 30-day payment option in the original order. The penalty under section 76 was also reduced. The matter was remanded to the Commissioner for redetermination of service tax liability and penalties. Penalties under sections 75A and 77 were upheld, and the appeal was disposed of accordingly.