SEKHAR SALES SYNDICATE Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) SERVICE tax of Rs. 1,51,393/ - was demanded from M/s. Sekhar Sales Syndicate, Salem, for Business Auxiliary Services it rendered during the period 10 -9 -2004 to 28 -2 -2005. After due process of law the original authority demanded service tax of Rs. 1,51,393/ -, interest due thereon and imposed penalties under Section 76, 77, and 78 of the Finance Act, 1994. In the impugned order, the Commissioner (Appeals) vacated the equal amount of penalty imposed under Section 78, reduced the penalty imposed under Section 76 to Rs. 10,000/ -, and upheld the penalty of Rs. 1000/ - on the appellants under Section 77 of the Finance Act. The Commissioner (Appeals) upheld the order of the original authority but for the above modification. The applicant has submitted a letter requesting the Tribunal to decide the appeal itself on merits. Accordingly, after dispensing with the stay application the appeal is taken up for final disposal.

(2.) AS per the impugned order, the assessee was engaged in grinding of Dead Burnt Magnesite (DML) lumps into powder for its customers and collected charges for the above service. The appellants had not followed the statutory formalities including registering themselves as a service provider with the department nor paid the service tax due. Though they took registration in March 2005, they did not pay the tax arrears till 8 -7 -2005. They had sought clarification as regards their liability to pay the service tax which they received only during July'05. On receipt of clarification, they paid the tax on 11 -7 -2005, before the issue of Show Cause Notice. Considering the facts that there was no suppression of facts involved and the appellant had furnished necessary details called for by the department, had obtained the registration certificate on their own during March'05 and paid the arrears of service tax before issue of Show Cause Notice, the Commissioner (Appeals) vacated the penalty under Section 78 and reduced the penalty imposed under Section 76.

(3.) ON a careful consideration of the facts of the case, I find that the non payment of service tax due by the appellants had occurred due to their ignorance of the scope of the new levy 'Business Auxiliary Service' under which grinding of DBM for a fee was classified by the department. The Commissioner has found that there was no suppression of facts by the assessee, it promptly furnished the information called by the department and paid the service tax when it became certain about their liability to pay the service tax involved. In the circumstances I find that there existed sufficient cause, which prevented the appellant from paying the tax due in time and the appellant deserves the benefit of the provisions contained in Section 80, which empowers the proper officer not to impose penalty in such circumstances. Accordingly, the penalty of Rs. 10,000/ - imposed under Section 76 of the Finance Act is set aside and the impugned order otherwise sustained.