1. This stay application and appeal have been filed against the Order-in-Appeal No. 26/2005, dated 5.8.2005 passed by the Commissioner of Customs and Central Excise (Appeals-II), Hyderabad. As the issue lies in short compass, the stay application and appeal are taken up together, for disposal.
2. The short point in this is the payment of service tax on the gross value of services charged. The appellant is rendering photographic services. As per the law, service tax has to be discharged on the value of the gross billing under Section 67 of the Finance Act, 1994.
However, it is seen that the appellant have deducted the value of the consumables and paid the service tax on the net value. Therefore, the Revenue "has proceeded against them and initiated action. The short payment of service tax to the tune of Rs. 1,66,431/- has bean confirmed along with interest under Section 75 of the Finance Act. A penalty of equal amount has been imposed under Section 78 of the Finance Act, 1994 and further penalty of Rs. 5,000/- has been imposed under Section 76 of the Finance Act, 1994.
3. Shri K. Nagaraj Rao, learned Advocate appeared for the appellants and Shri K. Section Reddy, JDR appeared for the Revenue.
4. It was urged by the learned Advocate that the notification exempting the valu? of consumables from the gross billing was issued only at a later date. Therefore, he fairly concedes that during the relevant period the liability squarely rests on the appellants. It was further submitted that the appellants had already paid an amount of Rs. 85,000/-. There was a prayer for waiver of penalty on account of the fact that there was no intention to evade the service tax and the short payment occurred only due to a different interpretation of the legal provisions.
6. We have gone through the records of the case carefully. Since the appellants conceded the liability to pay the short payment during the relevant period, we do want to dispute this point. It is seen that they have already paid a sum of Rs. 85,000/- and the balance amount is also to be paid by them along with interest. As regards the equal penalty under Section 78 of the Finance Act is concerned, we find that there is no mala fide intention and the short payment was on account of mis-interpretation of the legal provisions. Hence, we are inclined to set aside the penalty levied under Section 78 of the Finance Act. As regards penalty levied under Section 76, we find that the same is reasonable. The stay application and appeal are disposed of in the above manner.