Penalty set aside for service tax in manpower recruitment services; upheld in commercial coaching.

The tribunal set aside the penalty imposed on the appellant for non-payment of service tax liability in manpower recruitment services, as the appellant had paid the entire tax liability before the show-cause notice. However, the penalty for non-payment in commercial coaching services was upheld due to lack of evidence provided by the appellant. The appeal was partially allowed, with the penalty for manpower recruitment services being set aside and the penalty for commercial coaching services being upheld.

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Issues:
Penalty under Section 78 for non-payment of service tax liability in manpower recruitment services and commercial coaching services.

Analysis:
The appeal revolved around the penalty imposed under Section 78 of the Finance Act, 1994 for non-payment of service tax liability in two service categories: manpower recruitment agency services and commercial coaching and training services. The appellant had failed to discharge the service tax liability for both services during a specific period, leading to the issuance of a show-cause notice in December 2010. The lower authorities confirmed the demands raised for commercial coaching and training services as short paid and penalized the appellant under Section 78 for both services.

In the case of manpower recruitment and supply agency services, the appellant had paid the entire service tax liability along with interest before the issuance of the show-cause notice. The tribunal acknowledged the settled law by the Hon'ble High Court of Karnataka in a similar case and held that the penalty under Section 78, equal to the service tax, should be set aside in this scenario. Therefore, the penalty imposed on the appellant for manpower recruitment and supply agency services was deemed unjustified and set aside.

However, concerning the penalty imposed on the appellant for commercial coaching and training services, the tribunal found that the appellant failed to provide evidence demonstrating the billing and collection of study material charges from students. As the appellant was registered under this category since 2003 and lacked documentation supporting their case, the penalty for this service category was upheld. Consequently, the tribunal partially allowed the appeal by setting aside the penalty for manpower recruitment and supply agency services while upholding the penalty for commercial coaching and training services. The appeal was disposed of accordingly.

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