COMMISSIONER OF CENTRAL EXCISE Vs. ESS ESS ENGINEERS

JUDGEMENT

(1.) This appeal has been preferred by the revenue under Section 35G of the Central Excise Act, 1944 (for short, 'the Act') against order dated 12-8-2010, Annexure A-4, passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi claiming following questions of law:

(2.) The Assessee is, inter alia, engaged in providing of taxable service of ''Erection, Commissioning and Installation''. It failed to pay the service tax for the services rendered during 1-7-2003 to 30-9-2006. Show-cause notice was issued proposing to recover the service tax and levy penalty. The adjudicating authority confirmed the demand with interest and also levied penalty under Sections 76 and 78 of the Finance Act, 1994. The Appellate Authority partly allowed the appeal but upheld the demand of levy of penalty. On further appeal, the Tribunal set aside the levy of penalty holding that failure of the Assessee to pay the service tax due was not with intention to evade the payment of duty but on account of bona fide belief that the same was not payable. Following finding has been recorded in the impugned order:

(3.) I have carefully considered the submissions from both the sides and perused the records. I find that short payment was detected in course of audit of records of the Appellant Company when they submitted their financial records to the audit for inspection. It is not in dispute that the Appellant were registered with the Department and they were filing their returns regularly. The allegation against them is that they were not disclosing full value of the taxable service provided to their clients with the intention to evade the service tax. However, the Appellant's contention is that in addition to erection, commissioning and installation, they were also undertaking the work relating to fabrication and dismantling, on which they were not paying any service tax as according to them, service tax was not payable on the charges for fabrication and dismantling. On going through the records, I find the substance in this contention of the Appellant. In view of this, I am of the view that short payment was mainly due to the Appellant's understanding that they are not liable to pay service tax on the fabrication and dismantling charges. In view of this so far as penalty under Section 76 is concerned, I am of the view that there is a case for invoking Section 80.