COMMISSIONER OF CENTRAL EXCISE Vs. TIGER SERVICE BUREAU

JUDGEMENT

(1.) This appeal is by the revenue, challenging the order passed by the Tribunal as well as the first Appellate Authority, contending that, they have no jurisdiction to reduce the penalty imposed by the Assessing Authority under Sections 76 and 78 of the Finance Act, 1994.

(2.) The assessee, a Security Agency, had registered with the Service Tax Registration No. SA/MNG/04/2001-TSB, dated 18-5-2001. In the course of the audit of records of M/s. Bharath Sanchar Nigam Limited, Mangalore, (hereinafter referred to as "BSNL" for short), it was observed that the assessee had provided Security Agency Service to them for the period from 1-5-2001 to 31-3-2002 against payment of Rs. 18,84,141. However, the assessee had not paid the service tax on the said taxable value nor filed the ST3 return as required. Therefore, a show-cause notice was issued to the assessee, alleging that they have contravened Sections 68 and 70 of the Finance Act, 1994 (for short, hereinafter referred to as the "Act") and that they have concealed/suppressed the value of the taxable service with intent to evade payment of service tax and thereby rendered themselves liable for penal action under Section 78 of the Act. In the reply dated 31-7-2003, the assessee asserted that there was no deliberate intention to delay the payment of service tax. Though in the work order, the nature of job is indicated as "round the clock watch and ward", the services of the guards were utilized for office maintenance and house keeping job and that they were under the impression that they were exempted from payment of service tax. They have requested the BSNL to amend the work order and requested to make payment of service tax as demanded in the show-cause notice and that they are not in a position to pay service tax on their own unless it is recovered from BSNL. They also requested the authorities not to impose any penalty and they offered to pay the said service tax. Accordingly, they paid the service tax on 24-10-2003 and on 2-12-2003 in two instalments. The Assessing Authority did not accept the said explanation. Overruling the said objection he held, the assessee has contravened Section 68 of the Act. Similarly, there was a deliberate omission and suppression of this information and therefore, he proceeded to pass an order-in-original, confirming the service tax already paid by the assessee at Rs. 94,207 and demanded interest from 1-5-2001 till the actual date of payment and imposed penalty of Rs. 86,000 under Section 76 of the Act and also imposed penalty of Rs. 500 under Section 77 of the Act and imposed further penalty of Rs. 94,207 under Section 78 of the Act. Aggrieved by the said order, the assessee preferred an appeal to the Commissioner of Central Excise. Though the Appellate Authority did not find fault with the approach of the Assessing Officer, in imposing penalty, it observed that non-payment of service tax and non-filing of returns in this case establishes suppression of value of taxable service. However, taking into account the fact that the assessee paid the tax and interest before issue of show-cause notice, the case calls for lenient treatment with regard to penalty. Therefore, the Appellate Authority reduced the penalty to Rs. 20,000 under both Sections 76 and 78 of the Act and in all other respects, confirmed the order of Assessing Authority.

(3.) Aggrieved by the said order, the revenue preferred an appeal to the Tribunal. The Tribunal after referring to various judgments, held, penalty would not be imposable if tax is paid even before the issue of show-cause notice and therefore, it held the appeal by the revenue for enhancement of penalty is not justified and therefore, dismissed the appeal. Aggrieved by the said order of the Tribunal, the revenue is in appeal before us. This appeal came to be admitted to consider the following substantial question of law: