2018 (5) TMI 786 - AT - Service Tax

Tribunal overturns penalties under Finance Act, 1944 for service tax liability citing timely payments and lack of mala fide intent.

The Tribunal set aside penalties imposed under Sections 76 and 78 of the Finance Act, 1944 on a manpower recruitment agency for service tax liability ... Penalties u/s 76 and 78 - manpower recruitment agencies - period 16.6.2005 to 9.9.2005 - invocation of section 80 - Held that: - the Tribunal in the case of M/s. Jashbhai M. Parmar Versus Commissioner of Central Excise Vadodara [2013 (4) TMI 627 - CESTAT AHMEDABAD], has considered the fact that the definition of manpower recruitment services had undergone change twice, after its introduction in the statute on 16.6.2005 and by appreciating that the entire tax was deposited along with interest, the Tribunal set aside the penalty imposed upon the appellant. There is no positive evidence brought on record by the Revenue showing any mala fide on the part of the appellant - penalty not warranted - appeal allowed - decided in favor of appellant. Issues:Penalties imposed under Sections 76 and 78 of the Finance Act, 1944 for service tax liability during a specific period.Analysis:The appellant, a manpower recruitment agency providing services to a company, faced penalties totaling &8377; 48,598 for service tax liability during a period when the definition of services underwent changes twice. The appellant argued for invoking Section 80 of the Act to set aside the penalties, citing a Tribunal decision in a similar case. The Tribunal noted the changes in the definition of manpower recruitment services and the appellant's timely tax payment with interest. Without evidence of mala fide intent, the Tribunal followed precedent and set aside the penalties under Sections 76 and 78, while confirming the demand and interest not contested by the appellant.In conclusion, the Tribunal disposed of the appeal by confirming the demand and interest but setting aside the penalties imposed under both Sections 76 and 78. The decision was based on the lack of evidence of any wrongdoing by the appellant and the changes in the definition of services during the relevant period.