Tribunal upholds service tax demand but sets aside penalty for registration technicality.

The Tribunal upheld the demand of service tax, interest, and penalties under Sections 76, 77, and 78 of the Finance Act 1994 against M/s Rajapur Minerals for the supply of tangible goods service. However, the penalty under Section 77(1)(a) was set aside due to the appellant's existing registration for other services, despite the failure to amend the registration for the new service category. The Tribunal found that the penalty was not applicable in this case as the issue stemmed from non-amendment rather than non-registration, leading to the appeal being decided in favor of the appellant on this specific penalty.

---

---

Issues: Liability of service tax on supply of tangible goods service, imposition of penalties under Sections 76, 77, and 78 of the Finance Act 1994, non-payment of service tax, applicability of case laws, registration under different service categories, deliberate non-payment of taxes, penalty under Section 77(1)(a).

The judgment revolves around the liability of service tax on the supply of tangible goods service by M/s Rajapur Minerals, covering the period from 16.05.2008 to 31.12.2008. The Revenue department issued a show-cause notice alleging evasion of service tax on machinery hiring services. The Addl. Commissioner confirmed the demand of service tax, interest, and penalties under Sections 76, 77, and 78 of the Finance Act 1994. The first appeal before the Commissioner of Customs (Appeals) upheld the order-in-original with a modification setting aside one penalty. The appellant contested this decision, arguing they had sufficient CENVAT credit, no intention to evade tax, and confusion due to the new levy introduced in 2008.

The appellant's counsel cited various case laws to support their arguments, emphasizing their compliance with CENVAT credit and the lack of deliberate tax evasion. However, the Revenue contended that the appellant collected taxes from customers but did not remit them to the government, indicating criminal intent. The Tribunal analyzed the facts, noting that the appellant collected service tax but failed to deposit it, despite being aware of the liability. The Tribunal rejected the appellant's claim of innocence and confusion, highlighting the conscious collection of taxes without payment. The Tribunal referenced case laws like Ketan Engineering Services Pvt Ltd to support the Revenue's position on deliberate non-payment.

Ultimately, the Tribunal upheld most of the order-in-appeal, except for the penalty under Section 77(1)(a). The penalty was deemed unsustainable due to the appellant's existing registration for other services, despite the failure to amend the registration for the new service category. The Tribunal concluded that the penalty under Section 77(1)(a) was not applicable in this scenario, as the lapse was related to non-amendment rather than non-registration. Thus, the penalty under Section 77(1)(a) was set aside, and the appeal was decided accordingly.

---