2010 (1) TMI 316 - AT - Service Tax

Cargo Handling service non payment of service tax ignorance of service tax liability (law) Stay / dispensation of pre deposit Held that - have nothing to appreciate that the appellant has made efforts to know its liability if any when many contractors provided services to the aforesaid service recipient and few contractors were also brought to the ambit of taxation. The agreement dated 28-11-2001, which was subject matter of taxation, has come much after the law came into force. Therefore, prima facie, the appellant has no material fact to plead his ignorance of law. stay granted partly

Summary

Issues:
Service tax demand for Cargo Handling Services, Ignorance of law as a reasonable cause for non-payment, Nature of services provided by the appellant, Liability of Service tax, Law of limitation, Financial difficulties expressed by the appellant, Additional deposit directed by the Tribunal.

Analysis:

The judgment by the Appellate Tribunal CESTAT, NEW DELHI, addresses a Service tax demand of Rs. 7,32,7941- for Cargo Handling Services provided by the appellant. The appellant claimed ignorance of the law as a reasonable cause for non-payment, arguing that there was no suppression of facts due to ignorance. The Tribunal considered the nature of services provided by the appellant to M/s. Shreyans Industries Ltd., concluding that the services fell under clearing and forwarding services, subject to taxation. The authorities below examined the issue in detail, citing reasons for bringing the appellant under the tax law. The Appellate Authority also addressed the issue of limitation, holding the appellant liable for Service tax with penalties and interest.

The Tribunal found no evidence to support the appellant's claim of ignorance or to justify the law of limitation coming to the appellant's rescue. The appellant's lack of efforts to determine their tax liability, especially considering other contractors providing similar services were taxed, weakened the ignorance argument. The Tribunal noted the appellant's financial difficulties but highlighted the appellant's income tax return for the assessment year 2008-2009, indicating a gross income of Rs. 1,74,490. Despite a lack of the income tax return for the assessment year 2009-2010, the Tribunal directed the appellant to make an additional deposit of Rs. 1,50,000 within 8 weeks and report compliance by a specified date. Subject to compliance, the realization of the balance demand was stayed until the appeal's disposal.

In conclusion, the Tribunal's judgment emphasized the importance of compliance with tax laws, even in cases of alleged ignorance or financial difficulties. The decision balanced the appellant's circumstances with the need for tax liability fulfillment, directing an additional deposit while granting a stay on the balance demand pending compliance.