FAITHFUL SECURITY SERVICES Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) FAITHFUL Security Services, Coimbatore filed this appeal along with stay application against the impugned order No. 21/06 dated 2.8.06 passed by the Commissioner (Appeals), Coimbatore. The appellants had registered with the Central Excise Department as an assessee providing security services since the year 1998 when the security service was brought under the Service Tax. Pursuant to intelligence gathered by the Director General of Central Excise Intelligence to the effect that the appellants had been evading service tax, the records of the assessee were examined and statement of the proprietor Shri G.S. Nayagam recorded. Investigations revealed that the assessee had not been paying tax due on the entire taxable value charged for service rendered to its customers since its registration with the Department. In the statement recorded, Shri G.S. Nayagam, submitted that he had been aware of that service tax had to be paid on the gross amount billed and collected as security service charges; however he had been of the opinion that service tax was not required to be paid if it had not been collected from the customers. He had filed ST -3 returns showing the service tax collected periodically. He had paid income tax due correctly. The assessee had paid the short paid service tax in installments before the issue of Show Cause Notice. A notice was issued proposing to demand an amount of Rs. 8,09,496/ - being the differential service tax due for services rendered during the period from April 2002 to March 2004 and the interest due thereon till the date of payment of the short paid amount and to penalize the assessee. The notice also proposed to penalize the assessee for not collecting and paying service tax due by suppressing value of taxable service from the Department, in terms of Section 76 and Section 78 of the Finance Act, 1994.

(2.) AFTER hearing both sides, I take up the appeal itself for disposal after dismissing the stay application. The original authority had found that the assessee had fraudulently suppressed the full value of taxable services in the ST -3 returns with intend to evade payment of appropriate amount of service tax. He had not accepted the plea of the assessee that the demand had to be computed taking into account the taxable value that had escaped assessment as inclusive of the service tax. He was of the view that taxable value was the gross amount charged by the assessee. The assessee challenged the demand of interest and the penalties imposed in appeal filed before the Commissioner (Appeals), Coimbatore. In the impugned order, the Commissioner (Appeals) dismissed the appeal for the appellants' failure to make a predeposit of Rs. 7 lakhs ordered by him. The stay application is for waiver of predeposit and stay of recovery of the amounts as per the order of the original authority which came to be sustained in view of the impugned order. The assessee also claimed that differential tax due had to be recomputed considering the value that had escaped assessment as inclusive of also the service tax due.

(3.) APPEARING on behalf of the appellants ld. Consultant submitted that the short payment had occurred owing to the appellants' bona fide belief that he was not required to pay the service tax, if the same had not been paid by the persons who availed the appellants' service. He also submitted that penalty and interest were not chargeable as the short paid tax had been paid before issuance of the Show Cause Notice. Ld. Consultant cited several decisions of this Tribunal in support of his above claim. Ld. SDR submitted that the original order had been passed in accordance with law and the liabilities ordered had to be affirmed.