Appeal allowed, penalties set aside under Finance Act. Liability confirmed for service tax, interest chargeable. Penalties waived for reasonable cause.

The appeal was allowed to the extent of setting aside the penalties imposed under Section 76 and 78 of the Finance Act, 1994. The appellant's liability for service tax under security agency services was confirmed, along with the chargeability of interest on the unpaid amount. However, penalties were waived due to a reasonable cause for non-payment as per Section 80 of the Finance Act, 1994.

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Issues:
1. Appellant's liability for service tax under security agency services.
2. Imposition of penalties under Section 76 and 78 of the Finance Act, 1994.
3. Chargeability of interest on the service tax amount due.

Analysis:
1. The appeal was filed concerning the Order-in-Appeal passed by the Commissioner (Appeals) regarding the appellant's liability for service tax under security agency services. The appellant argued that they were providing taxable services under the category of security agency and had not paid the full demanded amount due to non-payment by the service recipient. The adjudicating authority confirmed the demanded amount, interest, and imposed penalties. The appellant contended that penalties should be waived under Section 80 of the Finance Act, 1994 due to a reasonable cause for non-payment.

2. The Revenue argued that penalties under Section 76 and 78 were correctly imposed, and interest was rightfully confirmed. The first appellate authority's order was strongly defended. After hearing both sides and examining the case records, it was noted that the appellant had not discharged the entire service tax liability due to non-payment by the service recipient. The appellant challenged only the imposition of penalties and interest.

3. Regarding the chargeability of interest on the service tax amount due, it was observed that the appellant had not paid the full service tax liability within the prescribed time, leading to the requirement of paying interest from the due date. The appeal on the chargeability of interest was rejected. However, concerning the imposition of penalties under Section 76 and 78, it was found that the appellant had a reasonable cause for non-payment due to the service tax not being separately recovered from the service recipient. As per Section 80 of the Finance Act, 1994, the penalties under Section 76 and 78 were set aside.

In conclusion, the appeal was allowed only to the extent of setting aside the penalties imposed under Section 76 and 78, as the appellant's case fell under the provisions of Section 80 of the Finance Act, 1994.

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