2012 (12) TMI 514 - AT - Service Tax

Banking and other Financial services - Bank run by co-operative society - Demand of Service Tax - Held that - Appellants contention that being a bank run by co-operative society, they would not be liable to pay Service Tax is not tenable and was not found favour with as relying on decision of M/s. Madhav Nagrik Sahkari Bank Ltd. vs. Commissioner of Central Excise, 2012 (3) TMI 283 - CESTAT, NEW DELHI - demands accordingly confirmed. Simultaneous penalty u/s 76 & 78 - Held that - As decided in CCE versus First Flight Courier Ltd. 2011 (1) TMI 52 - HIGH COURT OF PUNJAB AND HARYANA that simultaneous penalties under section 76 and 78 are not warranted - while upholding the penalty u/s 76 and 77, set aside the penalty imposed u/s 78 of the Finance Act, 1994.

Summary

Issues:
1. Non-compliance with the deposit order leading to dismissal of appeals.
2. Application for restoration of appeal due to deposit of entire Service Tax amount.
3. Liability of a bank run by a cooperative society to pay Service Tax.
4. Imposition of penalties under section 76 and section 78 of the Finance Act.

Analysis:
1. The appellant was directed to deposit 25% of the Service Tax confirmed against them within 8 weeks. Due to non-compliance, the appeals were dismissed. The Restoration of Appeal (ROA) application was filed along with a Condonation of Delay (COD) application to restore the appeal, citing the deposit of the entire Service Tax amount before the stay order was passed. The Bench recalled the order of dismissal and restored the appeals.

2. The Tribunal considered the liability of a bank run by a cooperative society to pay Service Tax under the category of Banking and Financial services. Referring to a previous decision, it was held that such banks are indeed liable to pay Service Tax, confirming the demands against the appellant.

3. Regarding penalties, the lower authorities had imposed penalties under both section 76 and section 78 of the Finance Act. Following a precedent and observing that simultaneous penalties under both sections are not warranted, the penalty under section 78 was set aside. The Tribunal upheld the penalty under section 76 and 77, while setting aside the penalty imposed under section 78.

4. The appeals, COD applications, and ROA applications were disposed of accordingly, with the Tribunal's decision pronounced in open court.