Custom, Excise & Service Tax Tribunal
Sridhar Detective And Security Agency vs Cce Belgaum on 7 October, 2013
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Application(s) Involved: ST/MISC/26043/2013 in ST/109/2007-SM Appeal(s) Involved: ST/109/2007-SM [Arising out of Order in Appeal No.322/2006-CE dt 02/01/2007 passed by the Commissioner of Central Excise (Appeals), Mangalore.] SRIDHAR DETECTIVE AND SECURITY AGENCY Appellant Versus CCE BELGAUM Respondent
Appearance:
Mr.M.S. Nagaraja, Advocate For the Appellant Mr. Ganesh Havannur, Addl. Commissioner (AR) For the Respondent CORAM:
SHRI B.S.V. MURTHY, HONBLE MEMBER TECHNICAL Date of Hearing: 07/10/2013 Date of Decision: 07/10/2013 Final Order No. 26699 / 2013 Order Per : B.S.V. Murthy The appellant was providing security services to various customers during the period from 2001-2002 to 2004-2005. They were paying service tax collected from their customers but in respect of four customers who were basically PSUs, they neither collected the service tax nor paid the same. On being informed that they have to pay the service tax irrespective of the collection of the same from the customers, the appellant discharged the entire liability of service tax during the period in which the show-cause notice was issued and adjudication order was passed and appellant was in the process of filing the appeal. The issue before me is whether the appellant s have to pay the penalty under Sections 76 & 78 imposed on them or not.
2. Learned counsel submits that appellant entertained a bona fide belief that when service is provided to PSUs they are not liable to pay. The moment they were informed, they contacted the PSUs and as an example he cites the case of BSNL who had replied to the appellant that in the absence of specific provision for payment of service tax in the agreement, BSNL would not pay the service tax for the period during which there was no provision in the agreement for payment. He also submits that since the appellant had paid the money from own pocket and the omission happened because of lack of sufficient knowledge of the legal provisions, a lenient view by invoking the provisions of Section 80 of the Finance Act, 1994 may be taken. He relies on the decision in the case of CCE, Mangalore vs. Tiger Service Bureau: 2011 (21) S.T.R. 364 (Kar.) to submit that in that case also in similar circumstances, Honble High Court took the view that this was a fit case for invoking the provisions of Section 80 of the Finance Act, 1994 on non-imposition of penalty.
3. Learned AR would submit that the appellant had collected the tax and paid in respect of others and therefore the claim of bona fide belief cannot be accepted. He also submits that the liability to pay service tax is on the service provider and failure to do so would attract penalty. Further, he fairly agrees that he does not have any case law contrary to the one which has been relied upon by the learned counsel.
4. I have considered the submissions made by both the sides. As it emerges from the records, the appellant had paid the service tax from own pocket and none of the four customers who had received this service had paid the amount of service tax even though they were PSUs. The claim of the appellant is that he entertained a bona fide belief that when service is provided to PSUs and service tax is not collected, he may not be liable to pay service tax. It is to be believed having regard to the nature of service, the service provider and the transactions involved. Under these circumstances, I find that the observations of the Honble High Court in the case of Tiger Service Bureau in para 6 which is reproduced below is relevant and is applicable to the facts of this case.
6. On the merits of the case, it is clear that the assessee has been prompt in paying the service tax in respect of other customers other than BSNL, which is a Government of India undertaking. From the explanation offered and his subsequent conduct, it is obvious probably entertaining a genuine doubt, whether the service tax is payable in respect of a service rendered to BSNL, a Government of India undertaking as they did not pay any service tax, in turn, he did not pay the service tax and after issue of show cause notice, demanded BSNL to pay service tax which they did not pay, but in order to avoid penal consequence, he has paid the tax at the earliest in two installments.
5. Having regard to the facts and circumstances of this case and after considering the decision of the Honble High Court, I consider it appropriate that in this case provisions of Section 80 of Finance Act, 1994 is required to be invoked in favour of the appellant. Accordingly the appeal is allowed by way of setting aside the penalties imposed under Sections 76 and 78 of the Finance Act, 1994.
6. After the matter was heard, it was noticed that there was an application for extension of stay filed by the appellant and received on 14.3.2013. Since the appeal itself has been finally decided, the application for extension of stay has become infructuous and accordingly, it is rejected.
(Order dictated and pronounced in open court) (B.S.V. MURTHY) MEMBER TECHNICAL RV 3