No penalty imposable when ST-1 was filed but there was no response from department.

PJ/ Case Law/2013-14/1620

Case:- COMMISSIONER OF CUSTOMS, CENTRAL EXCISE AND SERVICE TAX, SILIGURI Vs SHRI PRABIR KUMAR SARKAR (PROPRIETOR M/s EX-SERVICEMAN SECURITY SERVICE)

Citation:- 2013-TIOL-1000-CESTAT-KOL

Brief facts:- This Appeal is filed by the Appellant against the Order-in-Appeal No.15/SLG/2011 dated 05.04.2011 passed by Commissioner (Appeal-VI), Central Excise, Kolkata. The facts of the case are that Respondent, Shri Prabir Kumar Sarkar is an ex serviceman engaged in providing security services during the period from April, 2003 to September, 2008. They had made an application to the Department on 05.04.2005 seeking registration of the said services. However, as no response was received, they could not register themselves with the Department. Later on, the Department initiated investigation and issued show cause-cum-demand notice on 03.12.2008 demanding service tax of Rs.3,49,047.00 for the period from April, 2003 to September, 2008. On adjudication, the ld. Adjudicating Authority had confirmed the demand of Service Tax of Rs.3,49,047.00 and imposed equivalent penalty under Section 78 of the Finance Act, 1994. Aggrieved, the Respondent filed an appeal before the Commissioner (Appeals), who after considering the submissions of the Respondent, though upheld the liability of service tax, but set aside the penalty imposed by the Adjudicating Authority under Section 78 of the Finance Act, 1994. Aggrieved by the said Order of the ld. Commissioner (Appeals), Revenue is in appeal.

Appellants contention:- AR appearing for the Revenue submitted that the Applicant has not disclosed the services rendered by them to the Department, and discharged the service tax in time. However, during the course of hearing before this Bench, on being directed to verify the letter dated 15.04.2005 from the respective Range, ld. AR had called for the report from the officer who had received the said letter from Respondent. The ld. AR submitted that the Field Formation could not identify as to who had received the said letter. However, it has not been disputed that the said letter was received by the Department. Further, he has submitted that the entire amount of service tax along with the interest have been discharged being certified by the Field Formation through their letters dated 28.01.13, 25.02.13 and 08.03.13.

Respondents Contention:- Ld. Chartered Accountant, Shri R. Das appearing for the Respondent has submitted that the Respondent is an ex-serviceman who is rendering the business of providing services of security agency, and he was not much aware of the procedure under the Finance Act, 1994. However, he had approached the jurisdictional Service Tax Authority way back in April, 2005 making an application for registration under the Finance Act, 1994. As he did not receive any response from the Department, on a bona fide belief that the service rendered by him, perhaps did not attract service tax, and accordingly, he did not take out the registration or paid service tax. However, as soon as it was pointed out, he has paid the service tax and also discharged the Interest. It is his submission that there was no suppression of facts or misstatement, as the entire amount of taxable value collected were duly accounted for in their books of accounts and also in their Income Tax Returns.

Reasoning of Judgement:- The Tribunal observed thatthe Appellant is providing the services of security agency during the relevant period from April 2003 to September, 2008. It is not in dispute that the Respondent had approached the Department on 05.04.2005 seeking registration of the services and accordingly, filed details of their services under the prescribed ST-1 Form. The said ST-1 Form was duly received by the concerned Inspector of Central Excise, Jalpaiguri on 05.04.2005, a fact not disputed by the Department. Whatever amount they had received from rendering the said service, had been duly accounted for in their books of accounts, and also necessary income-tax returns were filed by the Appellant from time to time. Thus, Tribunal finds force in the arguments of the ld. Chartered Accountant for the Respondent that no facts were suppressed from the Department with intent to evade payment of service tax. Also, it was found that at no point of time, the Department had disputed that such ST-1 Form had not been filed by the Respondent. In these circumstances, the ld. Commissioner has recorded his finding after analyzing the facts as follows:-

The appellant has furnished a receipted copy of application for service tax registration in Form ST-1, which was submitted to the service tax officer on 05.04.2005 against which the appellant claimed to have received no response from Department. Whether service tax registration was issued by the authority at that time or not is not clear. In the rejoinder filed by the Assistant Commissioner of Jalpaiguri Division, he has preferred to remain silent on the ST-1 application filed by the appellant long back on 05.04.2005.”

Accordingly,the order passed by the ld. Commissioner (Appeals), isupheld, and the Appeal filed by the Revenue is dismissed being devoid of merit. Revenue'sAppeal is dismissed.

Decision:- The Revenue's Appeal is dismissed.

Comment:- The gist of the above case is that assessee cannot be said to have suppress facts from the department with intend to evade payment of service tax when the ST-1 was filed by him but there was no response from the department. Accordingly, it constructed bonafide belief of the assessee that no registration is required and no service tax is to be paid by him.

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PJ/ Case Law/2013-14/1620

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