Customs, Excise and Gold Tribunal - Ahmedabad
S. Doctor Security Services Pvt. Ltd. vs Cst on 16 May, 2008
ORDER Archana Wadhwa, Member (J)
1. The appellant are engaged in the business of providing security services, which are liable to service tax. The appellants are holding service tax registration and were paying tax as security service provider. However, scrutiny of their records revealed that the value of services as reflected in ST-3 return was much less than the value shown in the balance sheet, resulting in short payment of service tax of Rs. 6,34,945/-. The appellant's Director, in his statement, admitted that the services provided to the office of the Official Liquidator, High Court, is not being reflected in ST-3 returns and no service tax stands paid on the same inasmuch as they were under the impression that no service tax was required to be paid for the services rendered to Official Liquidator. However, they agreed to pay the differential service tax along with interest. The said tax and interest stand paid by them subsequently in March, 2005 and April, 2005.
2. On the above basis, proceedings were initiated against them vide show cause notice dt. 28/8/2005 for appropriation of the above deposited tax amount along with imposition of penalty. The original Adjudicating Authority confirmed the demand and interest and also imposed penalty of Rs. 100 per day under Section 76 for non-payment of tax, along with imposition of penalty of Rs. 6,34,945/- under Section 78 of the Act. However, he held that if the dues are paid within 30 days from the receipt of the order, the penalty amount would be reduced to 25% of the amount of service tax. The said order was appealed against before the Commissioner (Appeals), who upheld the same.
3. The appellants have contented that the service tax was not being paid on account of a bonafide belief that the same was not payable when the services were being provided to Official Liquidator, High Court. They submit that this bonafide belief was being entertained by them inasmuch as all the security agencies providing services to the said Liquidator were not paying any service tax on the value of the services so provided. They were also never advised by the Official Liquidator to pay service tax. They have also relied upon the Hon'ble Gujarat High Court's decision dt. 4/8/2005 wherein while disposing of the prayer of the funds to settle the security agencies' bills, the High Court observed that the payment of service tax should be made to the security agencies on production of challans showing that the service tax was paid to the Government and the said direction would be applicable from 1/7/2005. Accordingly, the appellant contented that though the notice was barred by limitation, they have not disputed the action of recovery on the ground of time bar, but they have facilitated and cooperated with the Department by immediately depositing the entire service tax along with interest the penalty should not be imposed upon them, by invoking Section 30 of the Finance Act, 1994.
4. I find that appreciation of facts on record show that there could be sufficient reasons on the part of the appellant to entertain a bonafide belief that the service tax was not payable inasmuch as services rendered to Official Liquidator of High Court. The fact that the other assesses similarly situate were also not paying any service tax in respect of services of rendered to the Official Liquidator is sufficient to strengthen the appellant's belief. In all other cases, they were paying service tax and as such, the appellant's plea of bonafide cannot be ignored. I also note that the appellants have deposited the duty amount as also the interest immediately on detection by the Department. As such, by pressing the provisions of Section 80 in to service, I set aside the penalties imposed upon the appellants. Appeal is disposed off in above terms.
(Pronounced in Court on 16/5/08)