SVENPA SYSTEMS Vs. THE COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THESE are appeals filed by the Revenue and the assessee, M/s Svenpa Systems against a common order of the Commissioner (Appeals), Mangalore. M/s Svenpa Systems runs a computer training centre as a franchisee of M/s Aptech. Vide the impugned order, the Commissioner affirmed demand of service tax of Rs. 2,49,216/ - for the period from 1.7.04 to 30.6.05 as well as penalties imposed under Sections 76 & 77 of the Finance Act 1944 (the Act) by the original authority but vacated the penalty imposed under Section 78 of the Act.

(2.) IN the appeal filed by the Revenue, it is submitted that the Commissioner (Appeals) had wrongly vacated the penalty imposed on the respondent under Section 78 of the Act. The respondent had not obtained registration under the Act nor had paid service tax before the department pointed out the statutory obligations. The assessee had sought exemption under Notification No. 9/03 ST dated 20.6.03, 1/04 ST dated 4.2.04 and 24/04 ST dated 10.9.04. This approach of claiming exemptions by the assessee showed that it was aware of the service tax law. The respondent had suppressed the relevant facts from the department with an intention to evade payment of service tax. The Commissioner (Appeals) had shown undue leniency by waiving the penalty Under Section 78 of the Act. This part of the order was not legal and proper. This penalty had to be restored.

(3.) WE have heard both sides. We find that the assessee had discharged tax due on services rendered during the period 1.7.2004 to 31.3.2005 in respect of computer training imparted by it as a franchisee of Aptech. We find that under Notification 24/04 ST 10.9.04 the impugned activity was exempt from service tax as the assessee had imparted computer training to educated unemployed youth under Yuva.com programme. This training equipped the candidates with skill and competence to set up their own ventures in the areas of job typing, desk top publishing, accounting etc. By imparting training under Yuva.com scheme, the assessee functions as a vocational training centre, qualifying for exemption under Notification No. 24/04 ST dated 10.9.04. In view of the confusion regarding exemption to the computer training from service tax that existed, the assessee had failed to follow certain statutory formalities Considering this uncertainty as to the assessee's liability during the material period, the Commissioner (Appeals) held that it had not deliberately evaded payment of tax, and had discharged the liability soon after the confusion was cleared. He also found that there was no malafide on the part of the assessee. We find that the assessee's claim that it was entitled to exemption in terms of Notification No. 24/04 ST and was not liable to pay service tax since 10.9.04 is correct. We also find that the assessee was not liable for penalty under Section 78 of the Act in the absence of any malafide on their part for any failure occasioned by the uncertainty as to their liabilities. For the same reason as led the Commissioner to waive penalty on the assessee Under Section 78 of the Act, it deserves waiver of penalties imposed on them Under Section 76 and 77 of the Act also. Accordingly, we allow the appeal filed by the assessee and reject the appeal filed by the Revenue. The appeals are disposed of.