2010 (1) TMI 367 - AT - Service Tax

Cable Operator Services- The issue involved in this case is regarding the Service tax liability of the respondent under the category of Cable Operator Services for the period September 2003 to March 2005. It is seen from the records that the respondent had not taken the registration and had not discharged the Service tax liability. Commissioner (Appeals) uphold the service tax but leave the penalty. Held that- invoking the provisions of Section 80 of the Finance Act 1994 we hold that the impugned order to the extent it sets aside the penalty imposed under Sections 76 & 78 of the Finance Act 1994 is correct and does not require any interference.

Summary

Issues: Service tax liability of the respondent under the category of 'Cable Operator Services' for the period September 2003 to March 2005, imposition of penalties under Sections 76 and 78, interest liability under Section 75, applicability of Section 73(3) of the Finance Act, 1994, interpretation of relevant legal provisions.

In this case, the Appellate Tribunal CESTAT, Bangalore, heard an appeal filed by the Revenue against the Order-in-Appeal confirming the Service tax liability of the respondent for Cable Operator Services for the period September 2003 to March 2005. Despite the absence of the respondent, the Tribunal proceeded with the appeal due to the narrow compass of the issue. The Adjudicating Authority confirmed the demand, Education Cess, interest, and penalties imposed on the respondent. The Commissioner (Appeals) upheld the Service tax liability but set aside the penalties and interest. The Revenue appealed challenging the setting aside of interest and penalties.

The Revenue's grounds of appeal primarily focused on the respondent's payment of Service tax due to the Department's intervention, arguing that interest should have been imposed as per Section 75. The Tribunal considered the submissions and records, noting that the respondent paid the Service tax liability after being pointed out by the authorities. The Tribunal analyzed Section 73(3) of the Finance Act, which allows for payment of service tax based on self-ascertainment before notice is served, and referred to a previous decision supporting the non-applicability of penalties once the tax liability is settled under this provision.

The Tribunal agreed with the Commissioner (Appeals) that penalties under Sections 76 and 78 should be set aside due to the respondent's lack of awareness as a small cable operator. However, regarding interest liability under Section 75, the Tribunal found the Revenue's case compelling and directed the respondent to discharge the interest liability determined by the lower authorities. Therefore, the Tribunal partly allowed the Revenue's appeal by reinstating the interest liability and partly rejected it by upholding the setting aside of penalties. The appeal was disposed of accordingly.