LION SECURITIES SERVICES Vs. COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) THE Appellants, M/s Lion Security Services were engaged in rendering 'Security Agency Services' during the period October 2003 to September 2005 and did not follow the statutory formalities as regards filing of ST -3 returns and payment of service tax. The Assessee was registered with the department as a provider of security agency service. A notice was issued on 10.11.2005 proposing to recover service tax not paid during the material period and to penalize the Appellant for its failure to follow the statutory formalities. After due process of law, the original authority confirmed the demand of service tax under the provisions of Section 73 of the Finance Act, 1994 (the Act) and left the quantification of duty to the concerned Superintendent at the Divisional office. He also demanded applicable interest under Section 75 of the Act. He imposed penalties on the Appellants under Sections 76, 77 & 78 of the Act. On appeal filed by the Assessee, the Commissioner(Appeals) found that the order of the original authority demanding duty without quantifying the same was not sustainable in law. Accordingly he remanded the dispute to the original authority. In remand proceedings, vide Order -in -Original No. 71/2008 dated 18.7.2008, the original authority observed that the Assessee had paid the service tax of Rs. 17,78,060/ - and appropriated the same. He confirmed the demand of the said amount along with interest, imposed penalty of Rs. 3000/ - under Section 77 of the Act, penalty equal to the service tax demanded under Section 78 and also penalty of Rs. 100/ - per day under Section 76 of the Act. Vide the impugned order, the Commissioner (Appeals) upheld the order of the original authority with the following findings:

(2.) THE learned Counsel for the Appellant submits that the challenge to the impugned order is limited to the penalties imposed. It is submitted that the Commissioner sustained the penalties with cryptic findings. It was not explained as to how the Appellant was liable for penalties.

(3.) I have carefully considered the rival submissions and also studied the case records. There is no dispute that the service tax paid was due and correctly paid. The challenge raised is to the penalties ordered. The show cause notice had proposed to demand service tax invoking a provision, namely Section 72 of the Act, which was not in existence on the date of issue of the show cause notice. Therefore the demand was not validly raised. Since the demand was confirmed by invoking a non -existing provision, the demand cannot survive. In the absence of a legally sustainable demand, there cannot be penalties imposed on the Assessee. I find merit in these arguments raised by the Appellants. However, I find that the findings in the impugned order reproduced above do not deal with the Assessee's penal liability properly and there is no speaking order in this regard. In the circumstances, the penalty liability of the Assessee is remanded for a fresh decision by the Commissioner (Appeals) after following principles of natural justice. The appeal is allowed by way of remand.