COMMISSIONER OF CENTRAL EXCISE Vs. J.R. SINGH

JUDGEMENT

(1.) HEARD the Ld. DR on behalf of the revenue. None appeared on behalf of the respondent.

(2.) THE relevant facts of the case, in brief, are that the respondents were engaged in providing services under a category of "Manpower Recruitment Agency Services". During the inquiry conducted on M/s. Goodlass Nerolac Paints Ltd., it came to the knowledge of the Department that the respondents were providing manpower services to the said Company. In response to the summon dated 14 -3 -2006, the proprietor of the respondent admitted that they were supplying manpower to the said company. He also stated that he had no knowledge of the applicability of the service tax on such activities. Thereafter, the respondent obtained service tax registration and paid the service tax of Rs. 4,32,352 vide TR -6 Challan dated 31 -7 -2006. A show -cause notice dated 7 -5 -2007 was issued proposing to appropriate the amount deposited by the respondent with interest and to impose penalties. The Original Authority confirmed the demand of tax of Rs. 4,32,352 along with interest and appropriated the said amount as deposited by them. He also imposed penalties of equal amount to tax under section 78 and penalties under sections 76 and 77 of the Finance Act, 1994. The Commissioner (Appeals) set aside the penalties in exercise of the powers under section 80 of the Finance Act, 1994. Hence, the revenue filed this appeal.

(3.) AFTER hearing the ld. DR and on perusal of the records, I find that respondents is a proprietorship firm. They are labour contractors. They supplied the labors to the said company. It is seen from the impugned order that they were not aware of the applicability of the service tax. They have also not collected the tax from the said company. However, they have deposited the tax as soon as it came to their knowledge. The Commissioner (Appeals) extended the benefit of section 80 of the Act as the respondents proved that there was a reasonable cause for the said failure. It is also noted that the respondent deposited the tax with interest long before issue of the show -cause notice. So, the Commissioner (Appeals) rightly set aside the penalties exercising the powers under section 80 of the Act.