2018 (2) TMI 402 - AT - Service Tax

Liability of service tax - installation charges collected - benefit of N/N. 12/2003 - Held that - The amount received for such services are taxable services - the appellant has no case on merits. Penalty - Held that - there is a clear finding by the Commissioner (Appeals) observing that it is sufficiently established that reasonable cause is made out by the appellant for non-payment of service tax during the disputed period. This was because there was much confusion as to whether installation charges and carriage fees are to be subjected to levy of service tax - penalty set aside by invoking section 80. Appeal allowed in part.

Summary

Issues:
- Appellants' liability for service tax on carriage fees and installation charges
- Eligibility for benefit under Notification No.12/2003
- Invocation of extended period of limitation
- Allegations of suppression of facts and penalties imposed

Analysis:
The judgment by the Appellate Tribunal CESTAT CHENNAI involved multiple issues regarding the appellants' service tax liability and penalties imposed. The appellants provided cable operator service, including Multi system operator service, and were alleged to have not discharged service tax liability on carriage fees from M/s. NDTV and installation charges from customers. The original authority confirmed a demand of &8377; 1,89,207 along with interest and penalties, which was upheld by the Commissioner (Appeals) with reduced penalties, leading to this appeal.

The appellant argued that they had paid service tax on subscription fees but not on installation charges, claiming these charges were not part of the taxable value of the service. They also contended that the charges from NDTV were incentives and did not fall under cable operator service. The appellant disputed the invocation of the extended period of limitation, stating they had promptly paid service tax upon notification by the department. The Commissioner (Appeals) acknowledged confusion regarding the inclusion of installation charges and carriage fees for service tax, finding reasonable cause for non-payment of service tax during the disputed period. However, the penalties were only reduced instead of being waived, which the appellant challenged.

The Appellate Tribunal, after hearing both sides, found no merit in the appellant's arguments regarding installation charges and carriage fees, deeming the services taxable. Despite this, the Tribunal agreed with the Commissioner (Appeals) that reasonable cause existed for the non-payment of service tax due to confusion over tax applicability. Consequently, the penalties imposed under Sections 76, 77 & 78 of the Finance Act, 1994, were deemed unwarranted, leading to the modification of the order to set aside the penalties while upholding the demand for service tax and interest. The appeal was partly allowed with consequential relief, if any, granted to the appellants.