CCE Vs. MILITARY EX-SERVICEMEN SERVICES

JUDGEMENT

(1.) M /s. Military Ex -Servicemen Services provided security service to different clients during the period October'98 to January'04. They collected service charges along with service tax of Rs. 82,819/ - but did not pay the tax collected to the government. After due process of law, the original authority demanded the service tax of Rs. 82,819/ - along with appropriate interest and imposed penalty of Rs. 500/ - under Section 75A and Rs. 82,819/ - under Section 76 on M/s. Military Ex -servicemen Services. In the impugned order, the Commissioner (Appeals) modified the order of the original authority by vacating the penalty of Rs. 82,819/ - imposed under Section 76. The instant appeal has been filed by the Revenue for restoring the penalty of Rs. 82,819/ - vacated by the appellate Commissioner.

(2.) LD . SDR submits that the Commissioner has waived the penalty on irrelevant considerations such as, the appellant is an organization of ex -servicemen who had spent the prime of their life in serving the nation and that they deserved some leniency. He submits that having collected the service tax, the respondents had knowingly withheld the tax. The penalty imposed was justified and deserves to he restored.

(3.) LD . counsel for the respondents submits that till 2003, the salary of the security guards were paid by the organizations that availed their service. They were under the impression that service tax also had to be paid by the availers of the service. It was only during the year 2003 that the society had undertaken to pay the service tax to the government in the contracts it entered into with the availers of its service. The respondents were not familiar with the formalities related to the new levy and their lapse in not paying tax in time deserved to be treated leniently.