2019 (11) TMI 491 - AT - Service Tax

Waiver of penalty - Non-payment of service tax - Sale of Space or Time for Advertisement - it is alleged that appellant neither registered nor paying due service tax on the services rendered by them during the period 01.05.2006 to 31.10.2009 - malafide intent present or not - HELD THAT - The Ld. Commissioner has categorically recorded the defense taken by the respondent wherein the respondent has intimated to the appellant through their letters dated 20.01.2010 and 28.01.2010 by enclosing a copy of letter dated 12.11.2009 issued by Railway Board wherein it was informed that the Ministry of Railway had written to Ministry of Finance, seeking exemption for railways from levy of service tax, enveloping both their core and auxiliary services - It was also informed that a Cabinet Note is also being moved seeking specific exemption for several auxiliary activities of Railways from the purview of service tax including the present service in question. There are no malafide intentions of the railways found, not to pay service tax on the activity undertaken by them for providing the services of Sale of Space or Time for Advertisement - penalty rightly waived. Appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against dropping penalties under Section 76, 77, and 78 of the Finance Act, 1994 by the adjudicating authority.

Analysis:
The appellant contested the impugned order dropping penalties under Section 76, 77, and 78 of the Finance Act, 1994 against the respondent, a Senior Divisional Manager at Northern Railway. The respondent provided services of 'Sale of Space or Time for Advertisement' falling under taxable service as per Section 65 (105) (zzzm) of the Finance Act, 1994. Despite not being registered or paying due service tax from 01.05.2006 to 31.10.2009, the respondent received multiple reminders requesting details of services rendered and amounts received. Subsequently, summons were issued, and after raising a demand for service tax, the penalties were dropped by the adjudicating authority, leading to the revenue's appeal.

The Revenue argued that despite being a Railway Department managed by the Government of India, the respondent's knowledge of taxable services was evident through reminders for service tax payment and details of services rendered. They invoked the extended period and contended that penalties were justifiable, citing a Tribunal decision in a similar case. However, as no representation was made on behalf of the respondent, the appeal was expedited for final disposal.

Upon review, it was noted that the respondent had communicated their defense by enclosing a letter from the Railway Board seeking exemption for railways from service tax, including the specific service in question. The Railway Ministry had moved a Cabinet Note for exemption, indicating no malafide intentions to evade service tax. Consequently, the impugned order dropping penalties was upheld, emphasizing the absence of any wrongdoing on the respondent's part regarding service tax payment for 'Sale of Space or Time for Advertisement.' The appeal was dismissed, affirming the adjudicating authority's decision to drop the penalties under Section 76, 77, and 78 of the Finance Act, 1994.