2012 (5) TMI 347 - AT - Service Tax

Exemption Notification No. 12/03 dated 12.6.03 - Commissioner (Appeals) extended the benefit of Section 80 by observing that they were seeking clarification from the Revenue which was not responded. He also recorded that there was no suppression on the part of the respondents. - appeal filed by the Revenue rejected.

Summary

Issues:
- Denial of benefit of exemption Notification No. 12/03 dated 12.6.03 for food items sold.
- Imposition and waiver of penalties under Sections 76, 77, and 78 of the Act.
- Seeking clarification from the Revenue and absence of suppression of facts.
- Applicability of decisions regarding exemption of food items from Service Tax.
- Validity of the Commissioner (Appeals) order.

Analysis:
1. The Appellate Tribunal considered the appeal against the order of the Commissioner (Appeals) that confirmed the demand against the respondents while denying them the benefit of exemption Notification No. 12/03 for food items sold. However, the penalty imposed was set aside by the Commissioner (Appeals).

2. The Tribunal reviewed the penalties imposed under Sections 76 and 77 of the Act. It was noted that the Appellants had sought clarification regarding the exemption notification multiple times, and no response was received from the department. The absence of queries during the submission of returns supported the Appellants' belief in availing the exemption. Consequently, the penalties under Section 76 were waived off under Section 80 of the Finance Act, 1994.

3. Regarding the penalty under Section 78, the Tribunal emphasized the necessity of establishing suppression of facts. The department failed to prove any suppression by the Appellants, as evidenced by their requests for clarification, timely submissions, and absence of deliberate defiance. Notably, the show cause notice did not propose penalizing the Appellants under Section 78, leading to the waiver of penalties under this section as well.

4. The Tribunal acknowledged that the Commissioner (Appeals) extended the benefit of Section 80 due to the Appellants seeking clarifications from the Revenue, which went unanswered. The absence of challenges from the Revenue regarding the clarifications sought further supported the decision to waive penalties.

5. Additionally, the Tribunal recognized the precedent of exempting food items from Service Tax based on previous decisions. Although the respondents did not appeal, these decisions influenced the finding of non-imposition of penalties. Ultimately, the Tribunal found no issues with the Commissioner (Appeals) order and rejected the Revenue's appeal.

This detailed analysis highlights the Tribunal's considerations regarding the denial of exemption, imposition and waiver of penalties, clarification-seeking behavior, applicability of legal precedents, and the overall validity of the Commissioner (Appeals) order in the given legal judgment.