2009 (12) TMI 326 - AT - Service Tax

Courier service-Penalties- The appellant is engaged in providing courier service and the service tax demand for the period from 1998-1999 to 2001-2002 has been confirmed against the appellant with interest as applicable and penalties. Held that- the appellant is a small entrepreneur, engaged in the business of courier service. The appellant has already deposited the tax with interest before issue of adjudication order. It is seen that there was confusion regarding the levy of tax. Hence, the penalties imposed on the appellant are not warranted. Thus, the appeal is allowed by setting aside the penalties

Summary

Issues:
Service tax demand for the period from 1998-1999 to 2001-2002 confirmed against the appellant with interest and penalties imposed under various Sections of Finance Act, 1994.

Analysis:
The appellant, engaged in providing courier service, had the service tax demand confirmed for a specific period along with interest and penalties under the Finance Act, 1994. The appellant's representative acknowledged the service tax liability without dispute. It was highlighted that a show cause notice was issued in 2003, and the service tax liability along with interest was paid in 2005 before the adjudication order in 2007. The appellant's small business status was emphasized, with details revealing a turnover of only Rs. 4,33,424 during the period, and a significant portion of revenue going to another courier service. The appellant's lack of record-keeping was noted, with reliance on the records of another courier service for details. Reference was made to Section 80 of the Finance Act, 1994, seeking a liberal view on penalties, citing relevant tribunal decisions.

The Revenue's representative pointed out the delay in the appellant's payment of service tax after the show cause notice, emphasizing the decision of the High Court of Kerala regarding penal provisions of the Finance Act, 1994. The Tribunal considered the submissions from both sides, noting the narrow issue at hand and the appellant's small business nature. The Tribunal reviewed the statements and investigations, concluding that the appellant indeed had a small business. The tribunal referenced previous cases to support the decision, emphasizing the appellant's timely tax payment and confusion regarding tax levy as reasons to waive penalties.

In agreement with the above analysis, the Tribunal found the appellant's case suitable for penalty waiver under Section 80 of the Finance Act, 1994. Considering the appellant's modest turnover and circumstances, the penalties imposed under various sections of the Finance Act, 1994, were set aside, while upholding the service tax demand and interest already paid. The appeal was allowed, and the penalties were waived, with the service tax demand and interest confirmed.