COMMISSIONER OF C. EX. Vs. BUSY BEE

JUDGEMENT

(1.) THIS is an appeal filed by the Revenue. In the impugned order, the Commissioner (Appeals) had vacated a penalty of Rs. 4,09,702/ - imposed on the appellants under Section 78 of the Finance Act, 1994 (the Act). The appeal seeks to restore the above penalty. The main ground taken in the appeal is that the assessee was aware of its liability to pay service tax as per the provisions of the Act. The respondents paid the service tax defaulted only after the department had initiated action to recover the same by issuing a show cause notice. This indicated that the finding of the Commissioner (A) that failure to pay the tax had occurred owing to the ignorance of the assessee was made without basis.

(2.) LD . SDR reiterates the grounds taken in the appeal.

(3.) I have carefully considered the facts of the case and the submissions made by both parties. The impugned order dealt with a case where the appellants had rendered 'Business Auxiliary Service' by providing office assistants to M/s. BPL Cellular Ltd. and M/s. ICICI Bank without registering themselves with the department and without following the statutory formalities including payment of service tax. The respondents had discharged their liability under the Act on coming to know of the same when the department had issued show cause notice proposing to recover the tax due and to impose penalties them. The Commissioner had vacated the penalty imposed under Section 78 of the Act and had sustained the penalties imposed under Sections 76 and 77 of the Act. As pointed out by the ld. Counsel for the appellants, the penalties sustained by the Commissioner (A) had already been vacated by the Tribunal on a finding that the failures had occurred due to the ignorance on the part of the respondents. In para 4 of the final order passed in respect of penalties imposed under Sections 76 and 77, this Tribunal had observed as follows: