1. This appeal is directed against Order-in-Appeal No. 169-2012 dated 19/11/2012.

2. Heard both sides and perused records.

3. On perusal of records, it transpires that the issue is regarding only penalty, imposed by the lower authority and upheld by the first appellate authority under the provisions of Section 78 of the Finance Act, 1994.

4. Appellant herein was rendering two services i.e. manpower recruitment agency services and commercial coaching and training services. It was noticed by the Department that during the period April 2007 to March, 2008, the appellant did not discharge the service tax liability on the manpower recruitment agency services and short paid service tax in respect of commercial coaching and training services. On being pointed out by the audit party, appellant discharged the entire service tax liability along with interest in respect of the manpower recruitment supply agency services in two instalments in October 2008 and November 2008. The appellant did not discharge any service tax liability shown as short paid in respect of commercial coaching training services. Show-cause notice dt. 31/12/2010 was issued for the demand of service tax liability, appropriation thereof in respect both the categories and also for imposition of penalties. The adjudicating authority as well as the first appellate authority appropriated the amounts paid by the appellant in respect of manpower recruitment and supply agency services and confirmed the demands raised under the category of commercial coaching or training services as short paid. The appellant was also penalised under Section 78 for both the services. It is the case of the appellant that in respect of manpower recruitment and supply agency services, having discharged the service tax liability along with interest before issuance of the show-cause notice, the provisions of Section 73(3) of the Finance Act, 1994 would apply and no penalty has to be imposed is the law which has been settled by the Hon'ble High Court of Karnataka in the case of CCE & ST, LTU Vs. Adecco Flexione Workforce Solutions Ltd. [2012 (26) STR 3 (Kar.)]; it is his further submission that in respect of commercial coaching and training services, the appellant has discharged the service tax liability along with interest on completion of adjudication proceedings. Hence benefit of Section 80 may be invoked and penalty may be set aside.

5. On careful consideration, this Bench feels that as regards the penalty under Section 78 for the charges of non-payment of service tax liability in the category of manpower recruitment and supply agency services, there is a strong force in the submissions made by the learned counsel. It is undisputed that the appellant has discharged the entire service tax liability along with interest before the issuance of the show-cause notice, which should have been considered by the lower authorities while issuing the show-cause notice and should not have issued any show-cause notice to the appellant for invoking the provisions of Section 78 for imposition of penalty. This is the law, which has been settled by the Hon'ble High Court of Karnataka in the case of Adecco Flexione Workforce Solutions Ltd. (supra). Respectfully following the said judgment of the Hon'ble High Court, this Court feels that the penalty imposed on the appellant under Section 78, which is equal to the service tax, needs to be set aside and is set aside.

6. As regards the penalty imposed on the appellant under the category of commercial coaching and training service, it is noticed that the appellant has not produced any documents which would indicate that they had specifically billed and collected the value of the study materials supplied to the students. In the absence of any such evidence to show, the demand which have been raised and confirmed by the adjudicating authority would attract the penal provisions as the appellant has already registered with the Department under the said category of commercial coaching and training services from 2003 onwards. It is noticed that the

appellant has no case on the penalty imposed in respect of the commercial coaching and training service. To that extent, the impugned order is upheld. 7. In sum, the appeal is allowed partially in respect of the penalty which is imposed under the category of manpower recruitment and supply agency services; while penalty imposed for the violation in respect of commercial coaching and training services is upheld. Appeal is disposed of.