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of <h1>Tribunal Upholds Service Tax, Waives Penalties under Sections 76, 77 & 78</h1> The Tribunal upheld the demand for service tax and interest but waived the penalties imposed under Sections 76, 77 & 78 by invoking Section 80 of the ... Penalties u/s 76, 77 and 78 - Business Auxiliary Service - matter under litigation during the disputed period - bonafide belief - Held that:- The service tax was levied on Business Auxiliary Service w.e.f. July 2003. Therefore, the contention of the appellants that they were under bonafide belief, due to the said service being new, that job work which they got done from outside small workshops/mechanics was not liable to service tax, is correct - also the service tax with interest paid on being pointed out before issuance of SCN - penalties u/s 76, 77 and 78 set aside by invoking section 80 - Appeal allowed. Issues:Appeal against service tax demand, penalties under Sections 76, 77 & 78 of the Finance Act, 1994, invocation of Section 80 for waiver of penalties.Analysis:The appellants were engaged in providing taxable services as an 'Authorized Service Station' and 'Business Auxiliary Services.' An amount was received for job work done without involving any manufacturing activity under the brand name of 'Bajaj.' The Department alleged that the appellants were providing 'Business Auxiliary Service' and issued a show cause notice demanding service tax of Rs. 57,248 along with interest and penalties under various sections. The adjudicating authority confirmed the demand and imposed penalties under Sections 76, 77 & 78. The Commissioner (Appeals) upheld the penalties under Sections 76 and 78 but reduced the penalty under Section 77. The appellants appealed against this order.The appellants did not contest the demand of service tax and interest, which they had already paid before the issuance of the show cause notice. They argued that they believed in good faith that the job work charges were not liable to service tax as it was done by outside workshops/mechanics. They immediately paid the duty upon being informed by the Department, showing their bonafide belief. The Tribunal found merit in the appellants' contention that they were under a bonafide belief due to the newness of the service tax levy on Business Auxiliary Service from July 2003. Considering the circumstances and lack of intention to evade tax, the Tribunal invoked Section 80 of the Act to waive the penalties imposed under Sections 76, 77 & 78.In conclusion, the Tribunal upheld the demand of service tax and interest but set aside the penalties imposed under Sections 76, 77 & 78 by invoking the provisions of Section 80 of the Act. The appeal was disposed of with this decision.
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