At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Chennai
By, THE HONORABLE JUSTICE: SULEKHA BEEVI C.S.
By, MEMBER AND THE HONORABLE JUSTICE: MADHU MOHAN DAMODHAR
For Petitioner: S. Venkatachalam, Advocate And For Respondents: R. Subramaniyam, AC (AR)
1. The appellants are providing cable operator service including Multi system operator service. A SCN was issued alleging that they have not discharged service tax liability on the carriage fees received from M/s. NDTV, New Delhi and also the installation charges received from the customers. After adjudication, the original authority confirmed the demand of Rs. 1,89,207/- along with interest and also imposed penalties. In appeal, the Commissioner (Appeals) uph
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eld the demand of service tax and interest thereon, however reduced the penalties. Hence, this appeal. On behalf of the appellant, Ld. Counsel Shri S. Venkatachalam submitted that the appellant has discharged the service tax liability on the subscription fees collected from the customers but did not discharge service tax on installation charges collected as these are not includible in the total taxable value of the service. The appellant would be eligible for the benefit of Notification No. 12/2003 on the installation charges if the documents are produced by the appellant since, the value of cables and set top boxes, etc., have to be deducted from such charges. With regard to the demand on the charges received from M/s. NDTV, New Delhi, he submitted that these are only incentives received from NDTV and therefore, would not come under cable operator service. The Ld. Counsel stressed that there are no grounds for invoking the extended period of limitation. The appellant had taken service tax registration and was discharging service tax liability on the services rendered by them. There was confusion whether the installation charges have to be included in the total value of the taxable service and therefore the appellants had not paid service tax on such installation charges. Further, the issue whether the carriage fees paid by NDTV would fall within the definition of cable operator's service was also doubtful. The appellant had immediately paid the service tax amount as well as the interest on being pointed out by the department. After making such payment, SCN has been issued by invoking the extended period alleging suppression of facts. Apart from vague allegation that the appellants have suppressed the facts, the department has not been able to establish anything in this regard. He drew our attention to para 5.9 of the impugned order and submitted that the Commissioner (Appeals) had observed that the appellant is eligible to get the benefit of Section 80 since the appellant has furnished reasonable cause for non-payment of service tax. However, instead of waiving penalties, the Commissioner (Appeals) has only reduced the penalty. He therefore pleaded that the penalties may be set aside in entirety.
2. Ld. AR, Shri R. Subramaniyam, AC, reiterated the findings in the impugned order. He argued that with regard to the issue whether installation charges have to be included in the value of taxable service though there might have been a doubt on the side of the appellant but however, the appellant has failed to disclose the carriage fees received from NDTV and therefore is guilty of suppression of facts and that the penalties imposed is legal and proper.
3. Heard both sides. On perusal of records as well as the submissions made by both sides, we do not find any ground to accept the contention put forward by the Ld. Counsel that installation charges need not be included in the value of the taxable service. So also the appellant has been getting signals from NDTV and retransmitted the same to the subscribers. The amount received for such services are taxable services. Therefore, we do not find that the appellant has any case on merits. However, as rightly pointed out by the Ld. Counsel, in para 5.9 of the impugned order, there is a clear finding by the Commissioner (Appeals) observing that it is sufficiently established that reasonable cause is made out by the appellant for non-payment of service tax during the disputed period. This was because there was much confusion as to whether installation charges and carriage fees are to be subjected to levy of service tax. The Commissioner (Appeals) however, instead of waiving penalties, has only reduced the same. The appellant was paying service tax and filing returns. Section 80 provides for waiving of penalty and not for reducing the penalty. In view thereof, we are of the considered opinion that the penalties imposed are unwarranted. The impugned order is modified to the extent of setting aside the penalties imposed under Sections 76, 77 and 78 of the Finance Act, 1994, without disturbing the demand of service tax and interest thereof. The appeal is partly allowed with consequential relief, if any