2008 (11) TMI 91 - AT - Service Tax

Penalty - appellant are engaged in the service of Tour Operators - they have been availing 90% abatement in terms of Notification Nos. 39/97-ST and 1/2006-ST - appellant had wrongly availed 90% abatement for paying service tax in respect of the service rendered as Rent a Cab Operator - the fact that the service tax had been paid immediately after lapse was pointed out is not in dispute therefore penalty u/s 78 is set aside - however the penalty imposed u/s 77 is upheld

Summary

Issues:
1. Incorrect availing of abatement for service tax as a 'Rent a Cab Operator'.
2. Imposition of penalties under Sections 76, 77, and 78 for the incorrect availing of abatement.
3. Dispute over penalties upheld by the Commissioner (Appeals) under Sections 77 and 78.
4. Comparison of the present case with previous judgments regarding penalty imposition.

Analysis:
1. The appellant had mistakenly availed 90% abatement for service tax while operating as a 'Rent a Cab Operator'. The department noticed this error during a visit, prompting the appellant to rectify the mistake by paying the service tax liability along with interest before receiving a Show Cause Notice. The Original Authority confirmed the demand, imposed penalties under Sections 76, 77, and 78, which the appellant contested.

2. The Commissioner (Appeals) set aside the penalty under Section 76 but upheld penalties under Sections 77 and 78. The appellant, dissatisfied with the upheld penalties, appealed to the Tribunal seeking relief. The appellant argued that the error was unintentional, and they rectified it promptly after being notified. The appellant also referenced a previous tribunal decision where penalties were set aside for similar circumstances.

3. The Departmental Representative argued that the circumstances in the present case differed from the previous tribunal decision cited by the appellant. The Commissioner (Appeals) noted that the appellant had collected service tax but failed to remit it to the department until detected. The Commissioner reasoned that this behavior demonstrated an intention to evade tax, justifying penalties under Sections 77 and 78.

4. Upon careful consideration, the Tribunal found that the appellant had indeed wrongly availed the abatement for service tax as a 'Rent a Cab Operator'. However, the Tribunal observed that the appellant had not collected higher amounts of service tax but had paid the tax after availing the abatement erroneously. Citing a previous decision, the Tribunal set aside the penalty under Section 78 but upheld the penalty under Section 77, ultimately disposing of the appeal accordingly.