COMMISSIONER OF CENTRAL EXCISE Vs. SINGLA FINANCE SERVICES

JUDGEMENT

(1.) THIS is an appeal filed by the Department. The brief facts of the case are that the respondents are functioning as Direct Marketing Agents of HDFC Bank and their activities were covered by the definition of "Business Auxiliary services", which became taxable with effect from 1 -7 -2003. However, while the respondents were providing this taxable service, they neither took service tax registration nor paid service tax till the non -payment was detected by the department in July, 2007. However, on being asked by the department in July, 2007, they took service tax registration and deposited the entire service tax and interest on 12 -8 -2005 for the period of dispute i.e., from 1 -7 -2003 to 31 -3 -2005. Subsequently, the department issued show -cause notice dated 24 -1 -2008 to the respondents for payment of service tax along with interest and imposed penalty under Sections 76, 77 and 78 of the Finance Act, 1994. The show -cause notice was adjudicated by the Assistant Commissioner vide Order -in -Original dated 27 -2 -2009 by which the service tax demand was confirmed along with interest and the amount deposited by the respondents towards service tax and interest vide TR -6 challan dated 12 -8 -2005 was appropriated. The Assistant Commissioner also imposed penalties under Sections 76, 77 and 78 of the Finance Act, 1994 on the assessee. On appeal, the Commissioner (Appeals) vide Order -in -Appeal No. 3/ST/Stay/CHD -II/2010, dated 25 -1 -2010 while confirming the Assistant Commissioner's order, reduced the penalty under Section 78 of the Act to 25 per cent of the service tax amount and penalty under Section 77 was upheld for non -filing of ST -3 returns. The penalty under Section 76 was set aside by invoking Section 80 of the Act. It is against this order of the Commissioner (Appeals) waiving penalty under Section 76 of the Act, that the department has filed this appeal.

(2.) HEARD both sides.

(3.) I find that the respondents is very small service provider and not taking service tax registration and non -payment of service tax took place during initial period when the service tax was introduced on "Business auxiliary services" with effect from 1 -7 -2003 and as soon as the respondents were informed by the department that their activity was covered by the definition of "Business Auxiliary services", they immediately discharged the tax liability along with interest. Moreover, I find that the penalty under Section 77 for non -filing ST -3 returns and penalty under Section 78 equal to 25 per cent of the penalty has already been upheld by the Commissioner (Appeals). In these circumstances, I do not find any infirmity in the order of the Commissioner (Appeals) waiving penalty under Section 76 by invoking Section 80 of the Finance Act, 1994. The revenue's appeal is, therefore, dismissed.