The appellants who are Rent-a-cab operators, are aggrieved by the imposition of penalty of Rs.71,193/- for non-payment of service tax during the period Apr.-05 to Mar.-06.
2. I have heard both sides. The demand of service tax is not disputed and stands paid together with interest. The submission of the assesses is that they are not guilty of suppression so as to warrant invoking of the extended period of limitation for the purpose of imposition of penalty. Their plea in his regard is that in the case of rendering a service to the National Highways Authority of India (NHAI), they were orally informed by the NHAI to withhold payment of service tax until further instructions and, therefore, they cannot be held to be guilty of any suppression with intention to evade payment of duty.
3. I, however, find no merit in the above submission in the light of the fact that the assessees were registered providers of services and were adjusting service tax liability when services were rendered by them to others and the oral instructions of NHAI cannot be a ground to hold that they were under a bona fide belief that they were not required to pay any service tax for Rent-a-cab service provided to NHAI. I, therefore, agree with the Revenue that the assessees had suppressed the fact of rendering of service to NHAI and collecting charges from them. Penalty on the assessees is, therefore, sustainable under provisions of Section 78 and penalty under Section 76 is set aside for the reason that Sections 76 and 78 of the Finance Act, 1994 are mutually exclusive. At this stage, the assessees drew my attention to their being entitled to the benefit of abatement under Notification No.9/2004-S.T., dated 09.07.2004 and also point out that such benefit has been extended for the months of Feb.-06 and Mar.-06 as seen from the worksheet appended to the show-cause notice. I see merit in the above submission and, therefore, accept the contention that for the period Apr.-05 to Feb.-06, they had paid at the rate of 100%, while they were entitled to 60% abatement. In this view of the matter, the tax liability is required to be recalculated and penalty, to the amount of tax evaded is required to be imposed.
4. The appeal is thus partly allowed as above.