KANNAPPA CORPORATION Vs. CCE (ST)

JUDGEMENT

(1.) THE applicant seeks waiver of penalties imposed on it under various Sections of the Finance Act, 1994, in the impugned order. The impugned order is an order in revision passed by the Commissioner. The original authority had dropped the proposal to penalize the appellants for violation of various provisions of the Finance Act, '94 including the requirement to discharge tax on the services rendered. The facts of the case are that the appellant M/s. Kannappa Corporation handled, stored and transported fertilizer of M/s. Oswal Chemicals and Fertilizers Limited, Paradeep, Orissa during 2003 -05. The appellant did not pay the service tax for the services rendered after April, 2003. The customer of the appellant had received legal opinion to the effect that the appellant was not required to discharge service tax for the activity undertaken by it and stopped reimbursing service tax paid by the appellant. A Show Cause Notice was issued in the year 2006 proposing to demand the service tax not paid during the material period. The appellants had paid the tax due before the issue of show cause notice. They also paid the interest thereon subsequent to the issue of show cause notice. After due process of law, the original authority confirmed the demand of service tax and interest but dropped the proposals to penalize the appellants under various Sections as proposed in the show cause notice. In the order in revision, the Commissioner imposed penalty on the appellants under Sections 76, 77 and 78 of the Finance Act '94. The instant application is to waive the requirement of predeposit and to stay recovery of the penalties as per the impugned order.

(2.) MOVING the application, the Ld. Counsel for the appellants submits that the CBEC vide its Circular F. No. 11/1/2002 -TRU dated 1.8.2002, had clarified that individuals undertaking the activity of loading or unloading of cargo would not be required to pay service tax under 'cargo handling services'. He relies on an order of this Tribunal in the case of Jagdeep Singh Saluja v. CCE reported in 2008 TIOL -282 -CESTAT -DEL, wherein it was held that a proprietorship concern engaged in handling and transporting fertilizer of various fertilizer companies was not required to pay service tax in view of the Board's Circular date 1.8.2002 (supra). In the said case also, the appellant therein had paid the service tax due before the issue of show cause notice. The Tribunal held that the violation of statutory provisions had occurred owing to (scope for) interpretation of the provisions and vacated the penalties imposed.

(3.) THE Ld. SDR submits that the appellants did not dispute the tax liability before the lower authorities and the original authority had not imposed penalties as proposed in the show cause notice on the sole ground that the appellants had cooperated with that authority. He submits that the original authority had taken the decision not to impose penalty on a wrong ground. He submits that the impugned order deserves to be sustained.