2014 (12) TMI 87 - AT - Service Tax

Tribunal upholds service tax demand for Business Exhibition Service, adjusts penalties under Sections 78 and 77

The Tribunal upheld a service tax demand of Rs. 2,12,011/- for Business Exhibition Service, reducing the penalty to 25% due to timely payment. The demand ... Club and Association Service - Business Exhibition Service - Penalty u/s 77 & 78 - Following decision of Federation of Indian Chambers of Commerce and Industry vs. CST [2014 (5) TMI 183 - CESTAT NEW DELHI], Sports Club of Gujarat Ltd. vs. Union of India [2013 (7) TMI 510 - GUJARAT HIGH COURT] and Ranchi Club Ltd. vs. CCE & ST, Ranchi Zone [2012 (6) TMI 636 - Jharkhand High Court] - service tax demand in respect of Club and Association Service alongwith penalty of equivalent amount under Section 78 is not sustainable and is set aside. Levy of penalty in respect of Business Exhibition Service - Held that:- Since the appellant had paid the service tax of ₹ 2,12,011/- in respect of Business Exhibition Service even before the adjudication alongwith interest and since no option had been given in the adjudication order in terms of proviso to Section 78 of the Finance Act, 1994 to pay lower penalty by paying the same within a period of 30 days from the date of communication of order, in accordance with the judgment of Hon’ble Delhi High Court in the case of K.P. Pouches (P) Ltd. vs. Union of India (supra), the benefit of lower penalty in terms of proviso to Section 78 cannot be denied and accordingly the penalty under Section 78 is reduced to 25% of the service tax demand upheld - Penalty u/s 77 is reduced to ₹ 1000 - Decided partly in favour of assessee. Issues:1. Service tax demand on Club and Association Service2. Service tax demand on Business Exhibition Service3. Penalty under Section 784. Penalty under Section 77Service tax demand on Club and Association Service:The appellant, an apex body of software companies, faced a service tax demand from the Department for the subscription amount charged from its Members under 'Club and Association Service' and for providing business exhibition service. The Commissioner confirmed a service tax demand of Rs. 7,24,98,866/- along with penalties under various sections of the Finance Act, 1994. The appellant contested the demand related to Club and Association Service, citing favorable judgments by the Tribunal and High Courts in similar cases. The Tribunal upheld the service tax demand of Rs. 2,12,011/- for Business Exhibition Service but set aside the demand for Club and Association Service based on the precedents cited.Service tax demand on Business Exhibition Service:The Tribunal upheld the service tax demand of Rs. 2,12,011/- for Business Exhibition Service as the appellant did not contest this amount. The payment made before adjudication and compliance with the proviso to Section 78 led to a reduced penalty of 25% of the service tax demand, following the judgment of the Delhi High Court in a related case.Penalty under Section 78:Regarding the penalty under Section 78, the Tribunal reduced it to 25% of the service tax demand upheld for Business Exhibition Service, considering the payment made before adjudication and the absence of an option to pay lower penalty within 30 days as per the proviso to Section 78. The penalty amount was adjusted accordingly.Penalty under Section 77:The penalty under Section 77, imposed for contravention of the Act or Rules, was reduced to Rs. 1,000/- from Rs. 200/- per day till the date of compliance. The Tribunal held that penalties should align with the provisions in force at the time of the offense, limiting the penalty to the maximum amount permissible during the disputed period. The appeal was partly allowed, reflecting the adjustments in penalties under Sections 78 and 77.This detailed analysis of the judgment highlights the issues of service tax demands on different services and penalties under relevant sections of the Finance Act, 1994, along with the Tribunal's decisions based on legal precedents and interpretations of the applicable laws.