2015 (4) TMI 658 - AT - Service Tax

Appeal allowed, penalties set aside for service tax liability. Tribunal recognizes voluntary payment exemption, genuine belief.

Gurlein Manchanda Versus Commissioner of Service Tax, Mumbai

The appeal was allowed, and the penalties imposed on the appellant for service tax liability for the period October 2002 to September 2004 were set aside. ... Waiver of penalty imposed u/s 78 - service tax liability and interest were paid on having pointed out by the departmental authorities after visiting their premises - Event Management Services - Held that:- the discharge of service tax on being pointed out, by appellant, gets covered under the provisions to provide that no show-cause notice is required to be issued if the assessee discharges the service tax and interest liability on his own ascertainment or on being pointed out by the Central Excise Officers. We hold that the said Section will be applicable to this case. We also find that the appellant could have entertained a bonafide belief that the services rendered by them is of Event Management of the marriage may not be covered under the tax net. In our considered view, this is a fit case for invoking provisions of Section 80 of the Finance Act, 1994. By invoking the said provisions of Section 80 of the Finance Act, 1994, we set aside the penalties imposed by the lower authorities. We would also like to record the argument taken by the appellant before the lower authorities that the 'Extra Ordinary tax Payers Friendly Scheme' is correct and applicable in this case; as has been settled by the Union of Indian Union of India v. Amit Kumar Maheshwari - [2008 (12) TMI 43 - HIGH COURT RAJASTHAN] - Penalty is set aside - Decided in favour of assessee. Issues:Service tax liability on the appellant for the period October 2002 to September 2004.Analysis:The appeal was against Order-in-Appeal No. V2(A)STC/33/2007/1840 dated 22.10.2009, with a Cross Objection filed by the Revenue. The issue revolved around the service tax liability of the appellant for the specified period. The appellant argued that they paid the service tax and interest on 30.10.2004 after being alerted by departmental authorities during a visit to their premises. They believed they were not liable for 'Event Management Services' as they were primarily involved in services related to marriages. On the other hand, the Revenue contended that the appellant, registered in September 2003, did not pay the service tax until prompted by the department. The Revenue also disputed the applicability of the 'Extra Ordinary Tax Payers Friendly Scheme' to the appellant.Upon reviewing the records, it was confirmed that the appellant indeed paid the service tax and interest on their own accord on 30.10.2004, which was not contested by them at any stage. The show-cause notice was issued on 31.10.2005. The Tribunal held that the appellant's voluntary payment of the service tax, upon being alerted, fell within the provisions that exempted the need for a show-cause notice if the tax liability was discharged by the assessee based on their own ascertainment or upon notification by Central Excise Officers. The Tribunal also acknowledged that the appellant may have genuinely believed that their services related to managing marriages were not taxable. Consequently, invoking Section 80 of the Finance Act, 1994, the Tribunal set aside the penalties imposed by the lower authorities. Additionally, the Tribunal referenced the appellant's argument regarding the applicability of the 'Extra Ordinary Tax Payers Friendly Scheme,' citing a relevant case law (Union of India v. Amit Kumar Maheshwari - 2009 (13) STR 119 (Raj)) to support their decision.In conclusion, the appeal was allowed, and the penalties imposed on the appellant were set aside. The Cross Objection filed by the Revenue was also disposed of accordingly.