Penalties to be waived if assessee had bona fide belief for non-payment of service tax

CESTAT, AHMEDABAD BENCH

Jalaram Mandap Decorators (P.) Ltd.

versus

Commissioner of Central Excise, Ahmedabad

ORDER NO. A/10154/WZB/AHD/2013
APPEAL NO. ST/211 OF 2011

JANUARY  18, 2013

ORDER

M.V. Ravindran

This appeal is directed against Order-in-Appeal No. 242/2010 (STC)/MM/Commr.(A)/Ahd., date 23-8-2010.

2. Heard both sides and perused the records.

3. The issue involved in this case is regarding imposition of penalties under sections 76, 77 and 78 of Finance Act, 1994, on the appellant herein.

4. It is the case of the appellant that they were under confusion that during the relevant period i.e. 01.08.2002 to 31.07.2003, as mandap keepers, they should discharge Service Tax liability on advance received by them to M/s Jalaram Mandap Decorators Pvt. Ltd. for some function and also for the commission received by them for the decoration. It is his submission that that when it was pointed out to them, the appellant has discharged the entire Service Tax liability and interest thereof and are only seeking setting aside of the penalty imposed by the lower authorities.

5. Ld. D.R., reiterates the findings of the lower authorities.

6. Ld. Chartered Accountant relies upon the judgment of the Tribunal in the case of CCE v. Chintamani Mangal Karyalaya (P.) Ltd. [2008] 13 STT 290 (Mum. – CESTAT), Jewel Hotel (P.) Ltd. v. CCE [2009] 9 STT 427 (Mum. – CESTAT), Creative Hotels (P.) Ltd. v. CCE [2007] 9 STT 451 (Mum. – CESTAT) and Idial Security Organization v. CST [2010] 25 STT 261 (Ahd. – CESTAT).

7. On perusal of the records, I find that that the appellant is a registered mandap keeper and was issued a show cause notice. There could be a situation where the appellant could be under a bona fide belief as to not to discharge the Service Tax liability on the advance amount received, during the material period, the issue of Service Tax liability under the Mandap Keeper services also was in litigation finally settled by Hon’ble Apex Court in the case of Tamilnadu Kalyana Mandapam Association v. Union of India [2004] 136 Taxman 596. I find that the appellant had discharged the Service Tax liability on being pointed out. As the appellant is not contesting the Service Tax liability and interest thereof, in my view, the lower authorities should not have issued the show cause notice as provisions of section 73(3) may apply in this case. Be that as it may, the judgment of the Tribunal in the case of Chintamani Mangal Karyalaya (P.) Ltd. (supra) in an identical issue, has held in favour of the appellant.

8. I find that this is fit case for invocation of provisions of section 80 of Finance Act, 1994 for setting aside the penalties imposed on the appellant under sections 76, 77 & 78 of Finance Act, 1994, as the appellant could be under a bona fide belief that they need not discharge the Service Tax on the amount of advance received by them.

9. In view of the above, I find that there is reasonable cause for invoking the provisions of section 80 and I do so. Accordingly, by invoking the provisions of section 80, set aside the penalties imposed under sections 76, 77 & 78 of Finance Act, 1994.

10. The appeal is allowed to that extent.