2008 (4) TMI 204 - AT - Service Tax

Tribunal Upholds Penalties for Business Services

SHAJI THOMAS Versus COMMISSIONER OF C. EX., TRIVANDRUM

The Tribunal upheld the imposition of penalties on the appellant for providing services falling under Business Auxiliary Services, despite the appellant's ... Appellant, Proprietory concern providing services to clients in respect of supply of IMFL to CSD Canteens – allegation against the appellant is that the appellant has been carrying on the activity of Business promotion on behalf of their clients - registration not taken - Revenue proceeded to demand Service Tax on the services carried out by him under the category of Business Auxiliary Services - no serious contest by appellant – stay is partly granted Issues:1. Applicability of Service Tax and Education Cess.2. Imposition of penalty.3. Allegation of not obtaining Registration Certificate and not paying Service Tax.4. Activity falling under Business Auxiliary Services.5. Financial hardship of the appellant.6. Pre-deposit amount determination.7. Stay on recovery during appeal.Analysis:1. The appellant was required to pre-deposit Service Tax and Education Cess along with a substantial penalty. The appellant, a Proprietory concern, provided services related to the supply of IMFL to CSD Canteens. The Revenue demanded Service Tax under Business Auxiliary Services, alleging non-registration and non-payment of tax. The appellant contended that the activity did not fall under Business Auxiliary Services and being a Proprietory concern, was exempt. The Commissioner found the activity to fall under Business Auxiliary Services due to services provided to clients, resulting in the imposition of penalties.2. The appellant, facing financial hardship, sought to pre-deposit a reduced amount for the appeal. The appellant's counsel submitted the appellant's financial constraints, offering to pre-deposit a specific sum. The appellant's plea for early hearing due to the significant amounts involved was also considered.3. The Commissioner's detailed findings supported by the impugned order concluded that the appellant's activities indeed constituted Business Auxiliary Services. The appellant's reliance on an exemption notification was rejected, leading to the imposition of penalties for suppression of facts.4. The learned Counsel for the appellant extensively argued the case, presenting an affidavit showing the appellant's financial liabilities. The appellant proposed a reduced pre-deposit amount, emphasizing the financial burden faced. The appellant's ability to raise a specific sum for pre-deposit was taken into account.5. The Tribunal reviewed the submissions and the impugned order, acknowledging the activity as falling under Business Auxiliary Services. Considering the appellant's commitment to pre-deposit a reduced amount, a specific pre-deposit sum was determined, with a stay on recovery during the appeal process. Failure to comply with the pre-deposit conditions would result in the dismissal of the appeal.6. The Tribunal's decision required the appellant to pre-deposit a specified amount within a set timeframe to waive the balance of Service Tax and penalty, with recovery stayed during the appeal. The appellant's compliance with the pre-deposit conditions was crucial to avoid dismissal of the appeal.7. The Tribunal granted a stay on recovery during the pendency of the appeal, emphasizing the importance of compliance with the pre-deposit conditions to avoid adverse consequences. The appellant's commitment to pre-deposit a reduced amount influenced the Tribunal's decision, ensuring a fair hearing process.