2009 (8) TMI 507 - AT - Service Tax

Cargo handling Services-Penalty- The appellant was providing services of loading stacking and unloading of cement in the godowns of M/s. Sarav Shaktiman Traders (P.) Ltd. and M/s. J.K. Cement Works on contract basis. They received notice from the Service Tax Department that they are liable to pay service tax under the category of Cargo Handling Services. On 11-6-2004 the appellant deposited an entire amount of Tax of Rs. 43, 081 along with interest of Rs. 4, 991. A show-cause notice dated 4-8-2004 was issued proposing to impose penalty on various sections of the Finance Act 1994. Original Authority imposed penalty of Rs. 90, 662 under the provisions of sections 75A 76 77 and 78 of the said Act. The appeal was dismissed for non-compliance of stay order. Held that- It appears that the appellant acted in a bona fide manner and deposit entire amount of Service Tax along with interest before issue of the show-cause notice. Thus it is a fit case for waiver of pre-deposit of entire amount of penalty for the purpose of hearing appeals for merits. As the Commissioner (Appeals) has not decided on merits it is appropriate to send back the matters to Commissioner (Appeals) to decide on merits.

Summary

Issues involved:
1. Appellant's liability to pay service tax under "Cargo Handling Services" category.
2. Imposition of penalty under sections 75A, 76, 77, and 78 of the Finance Act, 1994.
3. Appeal dismissal for non-compliance of stay order.
4. Plea of financial hardship by the appellant.
5. Appellant's deposit of entire service tax amount along with interest.
6. Consideration for waiver of pre-deposit of penalty.
7. Remand of the matter to Commissioner (Appeals) for decision on merits.

Analysis:
1. The appellant was engaged in providing loading, stacking, and unloading services for cement in godowns on a contract basis. They were notified by the Service Tax Department about their liability to pay service tax under the "Cargo Handling Services" category. The appellant deposited the entire tax amount along with interest upon receiving the notice. A show-cause notice proposing penalty under various sections of the Finance Act, 1994 was issued, and the Original Authority imposed a penalty. The appeal was dismissed due to non-compliance with a stay order.

2. The appellant, citing financial hardship, pleaded before the Commissioner (Appeals) that they were a small entrepreneur and had acted in good faith by depositing the tax upon becoming aware of their liability. The Judicial Member found that the appellant had indeed provided "Cargo Handling Services" as per the contract and had acted in good faith by depositing the tax before the show-cause notice. Considering these factors, the Judicial Member deemed it appropriate to waive the pre-deposit of the penalty for hearing the appeal on merits and remanded the matter to the Commissioner (Appeals) for a decision on merits.

3. The impugned order of the Commissioner (Appeals) was set aside, and the matter was remanded for a decision on merits. It was clarified that the observations made in the order would not influence the decision of the Commissioner (Appeals) on merit. The appeal was allowed by way of remand, with the directive for the Commissioner (Appeals) to provide a reasonable opportunity for a hearing before making a decision. The stay application was disposed of in light of these considerations.