2014 (11) TMI 42 - AT - Service Tax

Penalty u/s 77 & 78 - maintenance or repair service - Held that - Appellants are only challenging the penalties under Sections 77 and 78 of the Finance Act and the issue involved is in respect of interpretation of law and there were conflicting views on the subject matter, therefore we find merit in the contention of the appellant. The penalties imposed under Sections 77 and 78 of the Finance Act are set aside, otherwise the impugned order is upheld - Decided in favour of assessee.

Summary

Issues:
1. Challenge against penalties imposed under Sections 77 and 78 of the Finance Act.
2. Interpretation of law regarding taxability under the category of 'maintenance or repair service' for retreading of tyres.

Analysis:
Issue 1: The appellant challenged the penalties imposed under Sections 77 and 78 of the Finance Act in the appeal against the order passed by the Commissioner (Appeals). The appellant did not contest the tax amount paid with interest but specifically contested the penalties.

Issue 2: The appellant, engaged in retreading tyres, disputed the demand confirmed under the category of 'maintenance or repair service'. The appellant argued that there were conflicting views on the taxability under this category, citing a case where the matter was referred to a Third Member. The Revenue supported the findings of the lower authority.

Judgment: The Tribunal considered the conflicting views on the interpretation of law regarding taxability under the category of 'maintenance or repair service' for retreading of tyres. Given the divergence in opinions and the reference to a Third Member in a similar case, the Tribunal found merit in the appellant's contention. Consequently, the penalties imposed under Sections 77 and 78 of the Finance Act were set aside, while upholding the rest of the impugned order. The appellants were granted consequential relief, if applicable, in accordance with the law.