2009 (7) TMI 585 - AT - Service Tax

Penalty- Extraordinary Taxpayer Friendly Scheme- appellant herein was providing services under the category of Manpower Recruitment Agency Service during the period September 2003 to March 2004. The appellant had not filed ST-3 Returns nor they have discharged the Service Tax liability. On being pointed out the appellants discharged part of the amount before the issuance of show-cause notice and balance amount before the adjudication would take place. Appellants also discharged the entire Service Tax liability along with interest. The Adjudicating Authority confirmed the demand and imposed penalties under sections 76 and 78 of the Finance Act 1994. The Commissioner (Appeals) upheld the Order-in-Original. In the light of the decision of UOI v. Amit Kumar Maheswari 2009 18 STT 284 held that- Since the appellants have already discharged the Service Tax liability before expiry of the Extraordinary Taxpayer Friendly Scheme the penalties imposed on the appellants are unwarranted. Accordingly the impugned order to the extent it upholds the penalties imposed under sections 76 and 78 of the Finance Act 1994 is liable to be set aside. The appeal is allowed.

Summary

Issues:
1. Appellant provided services under 'Manpower Recruitment Agency Service' without filing ST-3 Returns or discharging Service Tax liability.
2. Adjudicating Authority confirmed demand, imposed penalties under sections 76 and 78 of the Finance Act, 1994.
3. Appellant appealed before Commissioner (Appeals) challenging the order.
4. Appellant claimed benefit under the 'Extraordinary Taxpayer Friendly Scheme'.
5. Issue of whether appellant is liable for penalties and entitled to benefit under the scheme.

Analysis:
The appeal was against an order confirming demand and imposing penalties under sections 76 and 78 of the Finance Act, 1994. The appellant, a Manpower Recruitment Agency, had not filed ST-3 Returns or discharged Service Tax liability for the period September 2003 to March 2004. The Adjudicating Authority confirmed the demand and penalties, which the Commissioner (Appeals) upheld. The appellant claimed benefit under the 'Extraordinary Taxpayer Friendly Scheme', having discharged the Service Tax and interest on 30-8-2004.

The appellant argued that their timely payment made them eligible for the scheme, citing relevant case laws. The departmental representative contended that the penalties were justified as the Service Tax liability was not discharged on time. The Tribunal considered both arguments and examined whether the appellant could be penalized under sections 76 and 78 of the Finance Act, 1994, and if they could benefit from the 'Extraordinary Taxpayer Friendly Scheme'.

The Tribunal noted that the appellant had indeed discharged the Service Tax and interest before the scheme's deadline, as undisputed. Referring to a precedent case, the Tribunal held that the scheme applied in such cases. Additionally, a High Court decision supported the applicability of the scheme to assessees who settled their liabilities before the scheme's cutoff date. Consequently, the Tribunal ruled in favor of the appellant, setting aside the penalties imposed under sections 76 and 78 of the Finance Act, 1994. The appeal was allowed, providing consequential relief as necessary.