2016 (9) TMI 238 - AT - Service Tax

Tribunal upholds service tax, interest; penalties set aside. Section 80 invoked for prompt tax payment.

Nair Coal Services Limited Versus Commissioner of Central Excise Nagpur

Nair Coal Services Limited Versus Commissioner of Central Excise Nagpur - 2016 (45) S.T.R. 529 (Tri. - Mumbai) Issues Involved:Service tax liability for supervising loading work of coal under 'business auxiliary service' category from April 2007 to October 2007, penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994, applicability of Section 73(3) and Section 80 of the Finance Act, 1994.Service Tax Liability and Penalties Imposed:The case involved a dispute regarding service tax liability under the 'business auxiliary service' category for supervising coal loading work. The appellant had paid the tax liability along with interest in December 2007 and January 2008 after being pointed out by the audit department. The adjudicating authority confirmed the tax liability, appropriated the amounts paid, and imposed penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The appellant argued that the issue of taxability was under litigation and that they had a bonafide belief the services were not covered under 'business auxiliary service.' The appellant also highlighted delays due to non-receipt of payments from State Electricity Boards. The Authorized Representative supported the penalties imposed by the adjudicating authority.Applicability of Section 73(3) and Section 80 of the Finance Act, 1994:The appellate tribunal noted that the appellant had discharged the tax liability promptly upon being pointed out by the audit department. It was observed that the delay in payment was due to non-receipt of payments from clients, and the appellant had a bonafide belief regarding the taxability of the services. The tribunal held that the show cause notice should not have been issued as Section 73(3) of the Finance Act, 1994 applied in this case. Additionally, the tribunal acknowledged the applicability of Section 80 of the Finance Act, 1994, where there was no delay in discharging the tax liability and a justifiable reason for the delay existed. Consequently, the tribunal set aside the penalties imposed on the appellant based on these provisions.In conclusion, the appellate tribunal upheld the service tax liability and interest but set aside the penalties imposed by the adjudicating authority. The tribunal invoked the provisions of Section 80 of the Finance Act, 1994, considering the circumstances of the case, where the appellant promptly paid the tax liability upon notification and cited valid reasons for the delay.