Tribunal partially allows appeal, sets aside demand & penalty for 2005-2007, upholds penalty for 2007-2008.

The Tribunal allowed the appeal in part, setting aside the demand and penalty for the period 2005-2007 based on the benefit of abatement under notification No. 15/2004. However, for the period 2007-2008, the Tribunal upheld the penalty for non-payment of service tax, remanding the matter for re-quantification of duty liability. The appellants' argument of non-receipt of tax from the client was rejected as a valid reason for non-payment, with the penalty and duty liability to be determined by the original adjudicating authority.

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Issues:
1. Benefit of abatement under notification No. 15/2004 for the period 2005-2007.
2. Non-payment of service tax and imposition of penalties for the period 2007-2008.

Issue 1: Benefit of Abatement (2005-2007)
The appellants were engaged in providing commercial or industrial construction services and claimed the benefit of notification No. 15/2004 for abatement during 2005-2007. The denial of this benefit was based on the appellants receiving material free of cost from the service recipient. The Tribunal, citing the case of Bhayana Builders Pvt. Ltd., held that the issue was no longer res integra and ruled in favor of the appellants, setting aside the demand for this period.

Issue 2: Non-Payment of Service Tax and Penalties (2007-2008)
During 2007-2008, the appellants failed to file service tax returns or pay the tax until prompted by the Revenue. The appellants argued that they did not pay the tax as their customer had not paid them, leading to a bonafide impression that they need not deposit the tax. However, the Revenue contended that the appellants, being aware of their tax obligations from previous years, displayed malafide intent by not paying the tax for 2007-2008. The Tribunal agreed with the Revenue, stating that non-receipt of tax from the client was not a valid excuse for non-payment. The appellants' penalty was upheld, but the matter was remanded for re-quantification of duty liability based on the Larger Bench's decision in Bhayana Builders Pvt. Ltd.

In conclusion, the Tribunal allowed the appeal in part, setting aside the demand and penalty for the previous year while remanding the matter for re-quantification of duty liability for the period 2007-2008. The appellants' argument regarding non-receipt of tax from the client was not accepted as a valid reason for non-payment of service tax. The penalty imposed on the appellants was upheld, and the quantification of penalty and duty liability was left to the original adjudicating authority.

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