Order date – 26 September 2022

Facts – 

• The appellant, M/s. State Industries Promotion Corporation of Tamil Nadu Ltd., is an undertaking of the State Government of Tamil Nadu are engaged in activities in the nature of acquisition of land, development of industrial complexes / parks / work centres etc.
• During the time of audit, it was found that they have short-paid service tax under various categories. 
• Show Cause Notice was issued proposing to demand the service tax under various categories of services along with interest and also for imposing penalty.
• The original authority confirmed part of the demand and dropped part of the demand that has been raised in the Show Cause Notice. The original authority also imposed penalty in regard to the demands confirmed. 
• The appellant is contesting only the penalties imposed under sec. 78 of the Finance Act, 1994.
• Aggrieved, the appellant filed an appeal.

Issue – 

• Whether the appellant is liable to the penalties?

Order – 

• The Tribunal observed that the appellant has accepted the demand with regard to non-payment of service tax under various categories of services. One of the issue was whether the amount that has to be paid under works contract services was to be treated as original works or maintenance work. Other issue was whether the tax has to be paid under manpower supply services or works contract service. It is seen that there are interpretational issues.
• It was held that there is no iota of evidence adduced by the department that the appellant has committed any positive act of suppression of facts with intention to evade payment of service tax.
• Further, the appellant is an undertaking under the State Government of Tamil Nadu and for these reasons they held that it is a fit case to set aside the penalties imposed under sec. 78 of the Finance Act, 1994.
• The impugned order is modified to the extent of setting aside the penalties imposed under sec. 78 of the Finance Act only without the disturbing the confirmation of demand or the interest thereon.
• Appeal allowed.