2009 (1) TMI 215

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....ision in the contract between ONGC and the appellants for payment of service tax and there was correspondence between the appellants and ONGC regarding service tax and finally the matter was referred to the arbitrator who ruled in their favour and also ordered that the appellants should discharge the service tax liability and ONGC should reimburse the same. Thereafter appellants paid the service tax even before the issue of show cause notice by the Department. The adjudication and appellate proceedings culminated in confirmation of duty demand of Rs.16,57,321/- with penalties under different sections of Finance Act, 1994. Hence the appeal and the stay petition. 2. The ld. Advocate on behalf of the appellants submitted that they had writt....

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....nsequences of doing the same. He submitted that no proper explanation has been provided for not discharging the statutory liability and he also pointed out that even if ultimately ONGC were not to pay, the liability would have to be discharged by the appellants. 4. I have considered the submissions from both the sides. The only dispute is regarding penalties imposed on the appellants and there is no dispute as far as tax is concerned. I find that the Commissioner (Appeals) has considered the issue of levy of penalty in detail and has found that penalty is justified & only minimum penalty that can be imposed has been imposed. I also find that the appellants were well aware that whether ONGC reimbursed the tax or not, the liability has to ....

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....iod from 1-4-2000 to 28-2-2002 owing to the dispute about its payment with ONGC, which could not be resolved through negotiations and had to be resolved through arbitration; that when the Arbitral Tribunal awarded in favour of the Appellants and directed the ONGC to pay the amount of service tax for the period 1-4-2000 to 28-2-2002, the amount of Rs.16,57,321/-, which was required to be paid as service tax during the period 1-4-2000 to 28-2-2002, has already been paid by the Appellants; that there was no mala fide on their part; that they have relied on the decisions in the case of ETA Engineering Ltd. v. CCE - 2004 (174) E.L.T. 19 (Tri.-LB) and in the case of CCE v. Sunitha Shetty - 2004 (174) E.L.T. 313 (Kar.) wherein it was held that pen....

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....the purpose of waiver of penalty imposed under Section 76 of the Finance Act, 1994 in terms of Section 80 of the Finance Act, 1994. Penalty under Section 76 ibid is upheld in respect of the demand of Rs.16,57,321/- for the period 1-4-2000 to 28-2-2002. 5.5 Further, the ratio of the decisions relied upon by the Appellants is not helpful to the present case as the facts and circumstances therein were quite different from those in the present case. In the case of ETA Engineering Ltd. v. CCE, Chennai - 2004 (174) E.L.T. 19 (Tri.-LB), the non-payment of service tax was due to the confusion prevailing about the categories of  people coming under the ambit of Consulting Engineer and the Hon'ble Tribunal observed that since the assessee....