M/S. Govardhan Enterprises Vs. Cst, Chennai - Court Judgment

The appellants do not challenge the liability to service tax on advertisements on bus panels, bus stations etc., and paid tax of Rs.90,653/-. They challenged the imposition of penalty upon them under the provisions of Section 76 and 78 of the Finance Act, 1994, on the ground that they were not aware of their liability during the relevant period and inspite of raising this plea before the authorities below, no finding has been recorded thereon.

2. I have heard both sides. The assessees have contended even before the lower authorities that they were not aware of the liability to tax during the period in dispute. No statement admitting knowledge of liability has been recorded. The department has not discharged the burden of showing that non-payment during the relevant period was not due to lack of awareness, and with any deliberate intention to evade payment of service tax. I, therefore set aside the penalties by extending the shelter under the provisions of Finance Act, 1944. Accordingly, I set aside the penalties under Section 76 and 78. Penalty imposed under Section 77 is however upheld, since there is no reason to interfere with the same. The appeal is thus partly allowed.