2008 (11) TMI 589 - AT - Service Tax

Summary

Issues Involved:
- Appellants required to pre-deposit penalties under Sections 78 and 76 of the Finance Act.
- Bona fide doubt regarding Service Tax liability on processing of MICR Cheques.
- Show Cause Notice issued after Service Tax liability discharged by appellants.
- Request to put appellants to terms by the Respondent.
- Appeal for full waiver of penalties imposed.

Analysis:

Issue 1: Appellants required to pre-deposit penalties under Sections 78 and 76 of the Finance Act.
The appellants were directed to pre-deposit penalties amounting to Rs. 2,73,51,424.45 under Section 78 of the Finance Act and Rs. 100/- per day under Section 76 of the Act. This order was challenged by the appellants, leading to the appeal before the Tribunal.

Issue 2: Bona fide doubt regarding Service Tax liability on processing of MICR Cheques.
The Chartered Accountant representing the appellants argued that there was a genuine doubt regarding the Service Tax liability on the processing of MICR Cheques. The clarification from the CBEC on this matter was received only on 25-2-2005, after which the Service Tax liability was discharged by the appellants. It was emphasized that there was no suppression of facts and no grounds for invoking the longer period.

Issue 3: Show Cause Notice issued after Service Tax liability discharged by appellants.
The appellants had already paid the Service Tax for the entire period in question along with interest well before the issuance of the Show Cause Notice on 29-8-2006. The Tribunal noted that the Service Tax was settled on 31-3-2005, indicating the appellants' proactive approach in meeting their tax obligations.

Issue 4: Request to put appellants to terms by the Respondent.
The Respondent, represented by the SDR, urged the Tribunal to uphold the impugned order and enforce the penalties against the appellants. However, after careful consideration, the Tribunal acknowledged the appellants' genuine doubt and their prompt action in discharging the Service Tax liability once it was clarified by the authorities.

Issue 5: Appeal for full waiver of penalties imposed.
After evaluating the circumstances and the actions taken by the appellants, the Tribunal decided to grant a full waiver of the penalties imposed until the appeal's final disposal. The stay application was allowed, and the appeal was scheduled for a final hearing on 9th February, 2009. This decision reflected the Tribunal's recognition of the appellants' compliance and the absence of any deliberate evasion or suppression of facts in the case.