Judgment:
1. These applications for waiver of predeposit and stay of recovery of the demand of Service Tax and penalty imposed by the Assistant Commissioner of Central Excise and affirmed in the impugned order have been filed by S/Shri M. Muruganandam and G. Govindaraj. The applicants along with Shri G. Sanjeevi had entered into a partnership and floated a firm by name Lakshmi Travels and rendered Rent-a-Cab Operator service during the period 2002-03 without registering the firm with the Department for the purpose and without paying the service tax due for the service rendered. A Show-cause notice was issued and after due process of law the original authority confirmed the demand of service tax of Rs. 1,29,294/- each on the three partners and imposed penalties of Rs. 50,000/- each on the appellants. The appeals filed by the appellants challenge the demand as barred by limitation and on the ground that the original Show Cause Notice had not proposed demand of service tax from the appellants and imposition of penalty on them.
Moving the applications, the ld. Counsel for applicants submits that the Show Cause Notice was initially issued demanding service tax from Lakshmi Travels and the same was withdrawn as per the order of the original authority. The applicants had not been put on notice as regards their liability to pay service tax. The partnership had been dissolved in 2003. Therefore the tax liability cannot be fastened on the partners of the dissolved firm. Vide letter dated 31.12.01, the jurisdictional Range Superintendent had addressed ONGC, the major client of Lakshmi Travels to direct Shri G. Sanjeevi (Managing Director of M/s. Lakshmi Travels) to register the firm as service provider and to pay service tax due from 1.4.2000. Ld. Counsel also submits that in respect of an appeal against a similar order demanding service tax from M/s. S.R. Cabs which had figured along with Shri G. Sanjeevi in the letter addressed to ONGC Limited by the Superintendent of Central Excise, the Tribunal had granted waiver of predeposit and stay of recovery of the dues. Ld. Counsel prays for similar relief in respect of the applicants S/Shri Muruganantham and G. Govindaraj. Ld. SDR submits that the liability of the partnership firm continued with the partners even after dissolution of the partnership. Each partner was equally liable for the tax liability of the partnership firm.
Therefore, the demand of service tax and penalty affirmed by the Commissioner (Appeals) in the impugned order are sustainable.
2. On a careful consideration of the case records and the submissions made by both sides, I find that the original order had withdrawn the Show Cause Notice issued to the firm but the demand on the appellants was made following proposals in the notices issued to them. The liability of the partnership/partners to tax cannot be denied. However, it is seen that the Department was aware of the tax liability of the appellants as early as in December 2001 and the Show Cause Notices were issued proposing to demand tax and to impose penalty on 21.10.05 and 16.10.06 (Notice only to Shri G. Govindaraj). The impugned order is issued in a case of similar facts as the one dealt with in Stay Order No. 376/07 dt. 16.4.07 of the Tribunal granting complete waiver of predeposit and stay of recovery mainly on the ground that the demand was hit by limitation. In the circumstances, I direct that there shall be complete waiver of predeposit and stay of recovery of the service tax demanded and penalty imposed on the appellants till the final disposal of the appeals.