STAR VISION Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE services rendered by the appellants to customers namely M/s Star India Ltd. and M/s ESPN were treated as 'Business Auxiliary services' and accordingly Service Tax was demanded for the period July, 2003 to May, 2004. A part of this tax (Rs. 2,48,668/ -) was paid before issue of the show -cause notice and the balance (Rs. 2,51,127/ -) subsequently, before the order of adjudication was passed. Penalties of Rs. 75,000/ -, Rs. 1,000/ - and Rs. 4,99,795/ - (equal to the total amount of tax) were also imposed on the party by the lower appellate authority under Sections 76, 77 and 78 respectively of the Finance Act, 1994. There is a demand of interest on tax also on the assessee. The present application seeks waiver of predeposit and stay of recovery in respect of these dues. After examining the records and hearing both sides, we find that the levy of Service tax on Business Auxiliary services was introduced with effect from 01.07.2003. The assessee, however, did not pay any tax on such services for quite sometime since that date. It is claimed that they came to be aware of their liability only when officers of the department visited them on 30.03.2004. Nevertheless, they did not discharge their tax liability in full even after the officers visited. It appears from the records that, before issue of the show -cause notice, they deposited the tax on the services rendered to M/s Star India Ltd. In respect of the services rendered to M/s ESPN, they deposited tax before the Order -in -Original was passed. In this connection, the delay is explained by submitting that M/s ESPN did not reimburse the tax to the assessee. It is claimed by ld. Consultant that documentary evidence is available to show that the tax was paid promptly upon realising liability and that the assessee had no malafides in the matter. Ld. SDR has contested this claim by referring to certain observations of the appellate Commissioner. Both sides have relied on certain decisions of the Tribunal.

(2.) AFTER considering the submissions and the case law cited before us, we have not found adequate evidence on record to indicate that the assessee had not collected tax from their customers. It would appear that, even after having collected tax from customers, the assessee withheld the amount. In the circumstances, intent to withhold payment to the exchequer cannot be ruled out. Hence the assessees liability to be penalised under Section 78 appears to have been correctly determined by the lower authorities. The question whether the maximum penalty (equal to tax) is liable to be imposed on the party under this provision requires to be examined at the final hearing stage. For the present, we direct them to predeposit Rs. 1 lakh. In respect of the penalties under Section 76 and 77, there will be waiver of predeposit and stay of recovery. There is no quantification of interest in the impugned order.

(3.) THE appellant shall deposit the aforesaid amount of Rs. 1 lakh (Rupees One Lakh only) within 4 weeks. Report compliance on 22.06.2006. In the event of due compliance, there will be waiver of predeposit and stay of recovery in respect of the balance amount of penalty imposed under Section 78 as well as penalties imposed under the other previsions.