2009 (9) TMI 564 - AT - Service Tax

Penalty Revenue filed the appeal against the order of Commissioner (Appeals), vacating the penalty. Held that - in the absence of any mala fide on their part for any failure occasioned by the uncertainty as to their liabilities. For the same reason as led the Commissioner to waive penalty on the assessee u/s 78 of the Act, it deserves waiver of penalties imposed on them u/s 76 and 77 of the Act also. Accordingly, we allow the appeal filed by the assessee and reject the appeal filed by the Revenue.

Summary

Issues:
1. Appeal filed by Revenue challenging the vacation of penalty under Section 78 of the Act by Commissioner (Appeals).
2. Appeal filed by the assessee regarding demand of Service tax, penalties, and exemption under Notification No. 24/04-S.T., dated 10-9-04.

Analysis:
1. In the appeal by Revenue, it was contended that the penalty under Section 78 of the Act should not have been vacated by the Commissioner (Appeals). The Revenue argued that the respondent had not obtained registration under the Act or paid Service tax until the Department pointed out the obligations. The assessee had claimed exemptions under various notifications, indicating awareness of the Service tax law. The Revenue alleged that the respondent suppressed facts to evade tax and that the Commissioner showed undue leniency by waiving the penalty under Section 78. The Revenue sought restoration of the penalty.

2. The appeal by the assessee revolved around providing training under the Yuva.com scheme announced by the Govt. of Karnataka. The assessee argued that the training was exempt under Notification No. 24/04-S.T., dated 10-9-04, which exempted commercial training by vocational training institutes. The confusion regarding exemption for computer training institutes was clarified later. The assessee contended that they had paid the tax due until the exemption notification was issued. The Commissioner found that the assessee qualified for exemption under the said notification and had not deliberately evaded tax. The Commissioner also noted the absence of mala fide on the part of the assessee. The Tribunal agreed with the assessee, holding that they were entitled to exemption and were not liable for penalties due to the uncertainty regarding their liabilities.

3. The Tribunal observed that the assessee had discharged the tax due for the relevant period and that the training provided under the Yuva.com scheme qualified for exemption under Notification No. 24/04-S.T. The Tribunal acknowledged the confusion surrounding the exemption for computer training institutes and found that the assessee had not deliberately evaded tax. Therefore, the Tribunal upheld the assessee's claim for exemption and rejected the Revenue's appeal. The Tribunal also waived penalties under Sections 76 and 77 of the Act, similar to the waiver under Section 78, due to the uncertainty faced by the assessee regarding their tax liabilities.

In conclusion, the Tribunal allowed the appeal filed by the assessee and dismissed the appeal filed by the Revenue, thereby disposing of both appeals.