2006 (2) TMI 52 - AT - Service Tax

Service Tax Security agency Services rendered by respondents are covered under security agency but they are not commercial concern which could be interpreted in two ways Penalty cannot be leviable on ground that interpretation of law is in question

Summary

Issues:
Appeal against Order-in-Appeal allowing appeal against penalty imposition.

Analysis:
The case involved a Cooperative Society providing security services without initially registering under the security services category. The Department concluded that service tax amounting to Rs. 4,23,857 had escaped assessment. A show cause notice was issued for recovery of the tax, penalty, and interest. The adjudicating authority confirmed the demand, imposed a penalty, and directed payment of interest. The Commissioner (Appeals) upheld the tax and interest but set aside the penalty. The Department appealed against the penalty cancellation.

The Department argued that the penalty cancellation was incorrect as the Society did not register despite providing security services for profit. The Commissioner's interpretation of the term "Commercial Concern" was challenged by the Department.

Upon review, it was found that the Society, registered as a cooperative society, provided ex-service men for security services to help them earn a livelihood. Although their services fell under the security agency definition, the penalty was set aside based on the interpretation of "Commercial Concern." The Commissioner reasoned that as a cooperative society for ex-service men's welfare, they may not be considered a commercial concern. The penalty was canceled due to the interpretation of law being in question, as penalties cannot be imposed in such cases.

The Tribunal dismissed the Department's appeal, citing lack of merit based on the interpretation issue. The decision was dictated and pronounced in open court.