CISF Lacked Clarity About Leviability Of Service Tax On The Security Services; CESTAT Quashes Penalty
Mariya Paliwala
10 Sep 2023 6:45 AM GMT
The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has quashed the penalty on the Central Industrial Security Force (CISF) on the grounds that CISF lacked clarity about the leviability of service tax on the security services.The bench of Ramesh Nair (Judicial Member) and C. L. Mahar (Technical Member) observed that since there was a lack of clarity about...
The Ahmedabad Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has quashed the penalty on the Central Industrial Security Force (CISF) on the grounds that CISF lacked clarity about the leviability of service tax on the security services.
The bench of Ramesh Nair (Judicial Member) and C. L. Mahar (Technical Member) observed that since there was a lack of clarity about the leviability of service tax on security services provided by the Central Industrial Security Force as part of the Government of India under the Ministry of Home Affairs, there was no mens rea on the part of the Central Industrial Security Force, and therefore, this case is covered under Section 80 of the Finance Act, 1994.
The appellant/department challenged the imposition of a penalty under Section 78, which was not imposed by the learned adjudicating authority.
The department submitted that the demand for service tax has been accepted by the respondent and the case has been settled under SVLDRS 2019. Since the demand has been accepted by the assessee or respondent and an extended period is involved, a penalty under Section 78 was supposed to be imposed by the adjudicating authority.
The adjudicating authority, while dropping the proposal for penalty under Section 78 of the Finance Act, 1994, found that the proposal for a penalty on CISF, as is evident from the ad hoc exemption, lacked clarity about the leviability of service tax on the security services provided by CISF for the reason that CISF is a government agency and also because the recipients are PSUs in which the government has a stake. There was no mens rea on the part of the CISF to evade payment of duty.
The tribunal held that the commissioner had rightly dropped the proposal to impose a penalty under Section 78.
Case Title: Commissioner of Central Excise & ST, Surat Versus Central Industrial Security Force
Case No.: Service Tax Appeal No. 11444 Of 2014-DB
Date: 05.09.2023
Counsel For Appellant: Tara Prakash
Counsel For Respondent: None
