2009 (12) TMI 199 - AT - Service Tax

Penalty- the appellant shall not be liable to Service Tax under the category of Maintenance and Repair Service prior to 16-6-2005. But he was of the view that Service Tax liability arising after 16-6-2005 shall be liable to Service Tax followed by equal amount of penalty. Held that- No penalty is leviable in view of infancy stage of law, through which the appellant crossed while incurring the liability. Appeal is allowed to the extent as indicated above setting aside the Appellate order partially.

Summary

Issues:
1. Service Tax liability for Maintenance and Repair Service.
2. Penalty under sections 76 and 78 of the Finance Act, 1994.
3. Invocation of section 80 of the Finance Act, 1994 for penalty consideration.
4. Allegation of suppression and imposition of penalty.

Service Tax Liability for Maintenance and Repair Service:
The Appellate Tribunal considered the case where the Appellant was initially held liable for Service Tax under Maintenance and Repair Service category after a certain date. The Appellant disputed the quantum of liability based on certain deductions from the total receipts. The Tribunal noted the submissions and ultimately determined the taxable value of service and corresponding Service Tax liability.

Penalty under Sections 76 and 78 of the Finance Act, 1994:
The Appellant sought leniency for waiver of penalty imposed by the Commissioner, arguing that there was no willful evasion of revenue, and the Appellant promptly sought registration under the Finance Act upon realizing the potential liability. The Tribunal considered the absence of mala fides on the part of the Appellant and the quasi-criminal nature of penalty proceedings. It concluded that the mere allegation of suppression, without clear proof, did not justify the penalty imposed. As a result, the Tribunal partially allowed the appeal, setting aside the penalty while confirming the Service Tax liability.

Invocation of Section 80 of the Finance Act, 1994 for Penalty Consideration:
The Appellant invoked section 80 of the Finance Act, 1994, seeking leniency for the penalty imposed by the Commissioner. The Tribunal considered this request in the context of the Appellant's compliance with the law and the absence of deliberate breach. It emphasized the need for clear reasons to impose a penalty in quasi-criminal proceedings and ultimately decided to set aside the penalty due to lack of sufficient evidence of contemptuous conduct by the Appellant.

Allegation of Suppression and Imposition of Penalty:
The Tribunal scrutinized the imposition of penalty based on an allegation of suppression by the Commissioner. Despite noting the finding of suppression in the order, the Tribunal highlighted the lack of clear proof or indication of deliberate breach of law by the Appellant. It emphasized that penalty proceedings require a solid rationale for imposition, which was found lacking in this case. As a result, the Tribunal concluded that the Appellant's conduct did not warrant the penalty and partially allowed the appeal by setting aside the penalty while affirming the Service Tax liability.