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TMI Blog2010 (8) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... he Proprietor, scrutinized Income-tax Returns and copies of the contracts entered into by the appellant with M/s. Western Coalfields Ltd. (A Govt. of India Undertaking). 3. The assessee has paid the entire amount of service tax ascertained by the authorities before issue of show-cause notice. The appellant was issued the show cause notice dated 11-12-2007 directing them to show cause as to why the demand of service tax under the category of 'site formation and clearance service and other services' recovered and penalty be not imposed on them. The appellant challenged the show-cause notice mainly on two counts (1) All the activities done by the assessee as regards the site formation and clearances, excavation and earth moving and demolition services were brought into service tax net with effect from 16-6-2005. The appellant also submits that they had no intention to evade the liability of service tax as M/s. Western Coalfields Ltd. (A Government of India Undertaking), had directed not to make any payment till the matter, being taken up by them with the Central Board of Excise & Customs (CBEC) is sorted out. It is the submission that when the matter had attained finality in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability after obtaining the letters of undertaking from the assessee. Consequently, the said activity was exempted by the CBEC. Hence the provisions of section 80 can be invoked in the case and the penalties imposed under sections 76, 77 & 78 of the Finance Act, 1994 be set aside. For the above propositions, he would relied upon the following case laws :- (i) M. Ramakrishna Reddy v. CCE [2009] 18 STT 465 (Bang. - CESTAT) (ii) CCE v. SVM Nett Project Solutions (P.) Ltd. [2009] 23 STT 366 (Bang. - CESTAT) (iii) Indian National Ship Owners Association v. Union of India [2009] 19 STT 408 (Bom.) (iv) CCE v. A.B. International [2008] 14 STT 245 (Mum. - CESTAT) (v) Majestic Mobikes (P.) Ltd. v. CST [2008] 16 STT 296 (Bang. - CESTAT) (vi) Maruti Suzuki Ltd. v. CCE 2009 (240) ELT 641/22 STT 54 (SC) (vii) C. Ahead Info Technologies India (P.) Ltd. v. CCE [2009] 20 STT 190 (Bang. -CESTAT). 5. Ld. JDR, on the other hand, submits that the adjudicating authority has correctly concluded the issue that the service provided by the assessee would fall under the category of 'site formation and clearances, excavation, earthmoving and demo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l of the agreement and work order issued by M/s. Western Coalfield Ltd. (A Govt. of India Undertaking) to the assessee, the said agreement and work order were issued prior to introduction of levy of service tax. The service tax liability under the category of 'site formation and clearance service' was brought into service tax net with effect from 16-6-2005. We find that the assessee had a dispute with M/s. Western Coalfield Ltd. (A Govt. of India Undertaking) regarding discharge of service tax liability under the category of 'site formation and clearance service'. The assessee was informed by M/s. Western Coalfield Ltd. that they are taking up the issue with the CBEC and hence directed him to keep pending all the payment of service tax on the said activities. We reproduce the letter dated 10-7-2006 issued by M/s. Western Coalfield Ltd. "Western Coalfields Limited Coal Estate, Civil Lines, Nagpur 440 001. Coal India WCL/NGP/ACCTS/STC/2006/EST 10-7-2006 The Area Finance Manager Nagpur/Umrer/Chandrapur/Wani/ Ballarpur/Majri/Wani North/ Pench/Kanhan/Pathakher Area, Dear Sir, Re. : Service Tax on Coal/Sand/OBR transportatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tax being reimbursed. Please ensure that all the above are complied with before release of fund to the Contractors. Yours faithfully, Sd/- General Manager (CMC) Encl. : Draft of Letter of Undertaking Copy to : (i) All A.F.M. all Areas - for necessary action. Copy for information to :- D (T)/P&P, WCL D(F), WCL" From the plain reading of the above reproduced two letters issued to the assessee, we note that there was a dispute which has been referred to CBEC, the highest authority in indirect taxes, as regards the discharge of service tax liability on the clearance of over cost (sic.) burden and removal of overburden, etc. It is seen from the records that the said dispute was finally sorted out and presumable CBEC informed M/s. Western Coalfield Ltd. that the liability that arisen on such activities are taxable under the category of 'site formation and clearance services'. Consequently the appellant discharged the entire liability by 29-11-2006. It is seen from the records that the show-cause notice was issued to the appellant on 11-12-2007. 9. It can be seen from the above reproduced factual mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 78 is warranted. He has recorded that the maximum penalty, which can be levied is twice the tax amount short paid which is Rs. 78,668. Holding such a view, he was merciful enough to impose only a penalty of Rs. 59,000. He has totally ignored the fact that the tax amount along with the interest was paid before the issue of show-cause notice. The Revisionary Authority should keep in mind that the penalty imposed should be commensurate with the offence. Majority of the cases from Serial Nos. 1 to 14 relate to the commission received by the Automobile dealers from financial institutions. There was doubt in the trade circles whether the commission received should be taxable under the category of "Business Auxiliary Service." When there is genuine doubt and the Board issued a clarification, no mala fide can be attributed. In such cases, waiver of penalty under section 80 is justified." It can be seen from the case in hand, that there was genuine doubts as regards the service tax liability in the mind of the service receiver and the service provider. In view of this, by invoking the provisions of section 80 of the Finance Act, 1994, we set aside the penalties imposed by the adju ..... X X X X Extracts X X X X X X X X Extracts X X X X
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