CESTAT overturns penalty on cable operator for service tax liability, citing lack of malafide intent

The Appellate Tribunal CESTAT NEW DELHI set aside the penalty imposed on a cable operator under sections 76, 77, and 78 of the Finance Act, 1994 for service tax liability. The Tribunal found that the appellant had consistently declared only the commission amount as the value of services without objections from the Revenue in previous filings. As there was no evidence of malafide intent, the Tribunal deemed the penalty unjustifiable and allowed the appeal, emphasizing the lack of support for penalty imposition.

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Issues: Penalty imposed under sections 76, 77, and 78 of the Finance Act, 1994 on a cable operator for service tax liability.

In this judgment by the Appellate Tribunal CESTAT NEW DELHI, the issue revolved around the penalty imposed on a cable operator under sections 76, 77, and 78 of the Finance Act, 1994. The appellant, a cable operator registered with the Revenue, discharged service tax liability only on the commission received, not including the gross amount from subscribers paid to the MSO. A demand of &8377;2,48,275/- was confirmed against the appellant, along with interest. The appellant had been granted Cenvat Credit for service tax paid on services received from the MSO. The lower authorities upheld the penalty, citing suppression by the assessee.

Upon review, the Tribunal noted that the appellant had consistently declared only the commission amount as the value of services in returns filed with the Revenue, with no objections raised by the Revenue previously. This practice was common among cable operator service providers. In the absence of evidence indicating malafide intent on the part of the assessee, the Tribunal deemed the penalty imposition unjustifiable. Consequently, the Tribunal set aside the penalty and allowed the appeal.

In conclusion, the Tribunal allowed the appeal, emphasizing the lack of evidence to support the imposition of the penalty on the cable operator for service tax liability under sections 76, 77, and 78 of the Finance Act, 1994.

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