2009 (12) TMI 210 - AT - Service Tax

Penalty- The assessees do not dispute the demand of service tax confirmed against them on the ground that they were rendering Commercial Construction Services during the period 1-1-2005 to 30-9-2006. Service tax liability was discharged on 30-11-2006, along with interest. The only challenge is to the imposition of penalties under the provisions of sections 76, 77 and 78 of the Finance Act, 1994 on the ground that tax liability was introduced in September, 2004 and they were not aware of their liability until it was pointed out by the authorities. Held that- setting aside the penalties as I accept that the assessees cannot be said to be guilty of any suppression so as to apply the extended period for the purpose of imposition of penalty. The penalties imposed upon the appellants are set aside and the appeal is allowed.

Summary

The Appellate Tribunal CESTAT, CHENNAI ruled in favor of the appellants in a case regarding penalties for non-payment of service tax. The penalties under sections 76, 77, and 78 of the Finance Act, 1994 were set aside as the appellants were not aware of their tax liability until authorities pointed it out, despite a statement from the proprietor mentioning lack of CENVAT credit and exemption. The appeal was allowed, and penalties were overturned.