Tribunal modifies penalties for service tax on 'Cleaning Services'

The Tribunal modified the impugned order by setting aside the penalty under Section 78 and reducing the penalty under Section 76 for a case involving liability for service tax on 'Cleaning Services'. The appellant's argument invoking Section 73(3) was rejected, and the appeal was disposed of accordingly.

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Issues:
1. Liability for service tax on 'Cleaning Services'
2. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994

Issue 1: Liability for service tax on 'Cleaning Services'
The appellant, registered for 'Security Agency Service,' also provided taxable 'Cleaning Services.' The lower authorities discovered non-payment of service tax on the 'cleaning service' from 15-6-2005 to 31-12-2005. The appellant later paid the entire service tax liability and interest. A show cause notice was issued proposing demand of service tax, Education Cess, penalties under Sections 76, 77, 78, and interest. The adjudicating authority upheld the demand, penalties, and interest. The appellant contended that the delay was due to the illness of the proprietrix and had no intention to evade tax.

Issue 2: Imposition of penalties under Sections 76, 77, and 78
The appellant challenged the penalties imposed under Sections 76 and 78 but accepted the penalty under Section 77. The appellant argued that there was no intent to evade payment and cited the delayed payment due to illness. The appellant collected service tax from customers, indicating awareness of tax liability. The Tribunal found no evidence of intent to evade tax and set aside the penalty under Section 78. Regarding the penalty under Section 76, the Tribunal noted that the appellant was aware of the tax liability but found the original penalty excessive. The penalty was reduced from Rs. 200/- to Rs. 100/- per day for the period of default. The appellant's argument invoking Section 73(3) was rejected as inapplicable to the case.

In conclusion, the Tribunal modified the impugned order by setting aside the penalty under Section 78 and reducing the penalty under Section 76. The appeal was disposed of accordingly.

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