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April 2011

(2011) 21 STR 210 (P & H) – CCEx. vs. Haryana Industrial Security Services

By Puloma Dalal, Jayesh Gogri, Chartered Accountants
Reading Time 1 mins
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Penalty u/s. 78 has to be equal to the amount of service tax demand and the law does not provide discretion to reduce.

Facts:
The assessee a security agency, paid service tax on the service charges received from the customers instead of gross amount charged for the period from 16/10/1998 to 30/09/1999. The assessee did not dispute the revenue’s contention that the minimum penalty prescribed under section 78 is equal to the amount of service tax. Based on other facts, the lower Appellate Authorities held that the assessee had suppressed facts and therefore, liable to penalty. However the Tribunal reduced the penalty amount to 1.5 lakh from 6.5 lakh.

Held:
The penalty equal to the amount of service tax was minimum and Tribunal’s order reducing penalty was set aside.

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