TMI Blog2010 (8) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... ed:- 26-8-2010 - M. V. RAVINDRAN, P. KARTHIKEYAN, JJ. ORDER M.V. Ravindran, Judicial Member - This appeal is directed against the Order-in-Original No. 09/2008-S.Tax (Commr.) dated 26-11-2008, passed by the Commissioner of Customs, Excise Service Tax, Guntur. 2. The relevant facts that arise for consideration are that the appellant herein, is registered under the category of Site Formation and Clearance Service with the authorities. The assessee is engaged in providing the services of blast-hole drilling, blasting, excavation, loading, transport, spreading, dumping, etc., of the overburden by using machines at Open Cast Mines and also undertaking similar activities which, according to the department, were covered under the taxable services. Revenue authorities, on verification conducted, found that the appellant did not pay the service tax. The Revenue authorities recorded statement of the Proprietor, scrutinized Income-tax Returns and copies of the contracts entered into by the appellant with M/s. Western Coalfields Ltd. (A Govt. of India Undertaking). 3. The assessee has paid the entire amount of service tax ascertained by the authorities before issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply of tangible goods services with effect from 16-5-2008. It is the submission that the appellant has not provided any service or work for construction, geophysical, geological or similar purposes; the entire work is done in respect of existing mines and would come under the purview of mining services. It is the submission that in view of this, reliance placed by the adjudicating authority on CBEC Circular dated 12-11-2007 is inappropriate. As regards the imposition of penalty, it is the submission that though the appellants had taken the registration certificate under the category of site formation and clearance services on 27-3-2006, he could not discharge the service tax liability as the service receiver, i.e., M/s. Western Coalfields Ltd., had certain doubts about the levy of service tax on such activities. It is the submission that the service receiver agreed to reimburse the service tax liability after obtaining the letters of undertaking from the assessee. Consequently, the said activity was exempted by the CBEC. Hence the provisions of section 80 can be invoked in the case and the penalties imposed under sections 76, 77 78 of the Finance Act, 1994 be set aside. Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Returns and hence the judgment of the Hon ble Supreme Court in the case of Asstt. Commercial Taxes Officers v. Kansai Nerolac Paints Ltd. 2010-TIOL-35-SC-CT would cover the issue in favour of the Revenue and is liable to pay the penalties imposed. 6. We have carefully considered the submissions made at length by both the sides and perused the case records. 7. The issue involved is regarding service tax liability on services rendered by the appellant during the period 2005-06 to 1-6-2007 under the category of site formation and clearance, excavation and earthmoving and demolition service . 8. On perusal of the records, we find that the appellant himself got registered under the said services on 27-3-2006. Subsequent to such registration, he had been discharging the service tax liability. This is the contention of the Revenue authority. On perusal of the agreement and work order issued by M/s. Western Coalfield Ltd. (A Govt. of India Undertaking) to the assessee, the said agreement and work order were issued prior to introduction of levy of service tax. The service tax liability under the category of site formation and clearance service was brought into service tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ensure the following before releasing the payment of the Service Tax: (a) The Service Tax is payable on the work done on and from 16-6-2005. (b) The rate of Service Tax is 10.2 per cent up to and including 17-4-2006 and 12.24 per cent on and from 18-4-2006. (c) Attested copy of Contract-wise challan for having paid the Service Tax Under protest should be obtained and verified with the Original challan. (d) Only Service Tax at the rates specified above to be reimbursed. Interest amount is to be reimbursed. (e) The Letter of Undertaking should be on a non-Judicial stamp paper of Rs. 100 and duly notarized by a Notary Public. (f) Necessary separate note to be moved by the Areas for addition budget to the extent of Service Tax being reimbursed. Please ensure that all the above are complied with before release of fund to the Contractors. Yours faithfully, Sd/- General Manager (CMC) Encl. : Draft of Letter of Undertaking Copy to : (i) All A.F.M. all Areas - for necessary action. Copy for information to : D (T)/P P, WCL D(F), WCL From the plain reading of the above reproduced two letters issued to the assessee, we note th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonably said to be a cause which prevents a man of average intelligence and ordinary prudence acting under normal circumstances without negligence or inaction or want of bona fide. In all the cases decided under revisionary powers by the Commissioner of Service Tax, Bangalore a penalty under section 78 has been enhanced to savage proportions. In the case of M/s. Sri Rama Enterprises, the service tax involved is Rs. 39,334 , the Commissioner has enhanced the penalty under section 78 from Rs. 2,000 to Rs. 59,000. This is not at all justified. The logic of the Commissioner is that the Original Authority confirmed the demand because of suppression of facts. Therefore, severe penalty in terms of section 78 is warranted. He has recorded that the maximum penalty, which can be levied is twice the tax amount short paid which is Rs. 78,668. Holding such a view, he was merciful enough to impose only a penalty of Rs. 59,000. He has totally ignored the fact that the tax amount along with the interest was paid before the issue of show-cause notice. The Revisionary Authority should keep in mind that the penalty imposed should be commensurate with the offence. Majority of the cases from Serial ..... X X X X Extracts X X X X X X X X Extracts X X X X
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