Appellate Tribunal CESTAT ruling on service tax demand and penalty under Finance Act, 1994

The Appellate Tribunal CESTAT NEW DELHI dealt with appeals from both the revenue and the assessee arising from the same impugned order. The Tribunal confirmed a service tax demand against the assessee for suppressing the value of service tax and non-deposit of collected tax. The penalty under section 78 of the Finance Act, 1994 was dropped. The revenue's appeal was partially allowed due to a change in law regarding assessable value, while the appellant's appeal was rejected for depositing tax at a reduced value. Both appeals were disposed of on 14.03.2013.

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Issues:
1. Disposal of appeals by revenue and assessee arising from the same impugned order.
2. Confirmation of service tax demand on the grounds of suppressed value and non-deposit of service tax.
3. Relief granted by Commissioner (appeals) on the addition of material cost but confirmation of partial demand.
4. Imposition of penalty under section 78 of the Finance Act, 1994.
5. Interpretation of assessable value based on gross value and applicability of penalty.

Analysis:
The judgment by Mrs. Archana Wadhwa of the Appellate Tribunal CESTAT NEW DELHI dealt with appeals from both the revenue and the assessee arising from the same impugned order passed by the Commissioner (appeals). The Applicant, engaged in Photography Services, faced a total service tax demand of Rs. 95,096/- for allegedly suppressing the value of service tax by not including material costs and not depositing service tax collected from customers. The Commissioner (appeals) granted relief on the material cost issue but confirmed a demand of Rs. 62,768/- due to non-deposit of service tax collected from customers. The penalty under section 78 of the Finance Act, 1994 was dropped by the Commissioner (appeals) as it was deemed to be in the knowledge of the revenue.

Regarding the revenue's appeal, the Tribunal noted that the issue of material cost had been decided against the Applicant by a Larger Bench Decision, requiring the adoption of gross value for assessable value. The Tribunal upheld the confirmation of the demand against the Applicant but found no justification for imposing a penalty, given the change in law declared subsequently by the Larger Bench. Thus, the revenue's appeal was allowed partially.

Concerning the appellant's appeal, it was observed that the appellant collected service tax from consumers on the full gross value but deposited it at a reduced value. The Tribunal agreed with the lower authority's decision to confirm the demand on the said amount, leading to the rejection of the appellant's appeal. Both appeals were disposed of accordingly, with the order being dictated and pronounced in court on 14.03.2013.

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