SOLOMON FOUNDRY Vs. CCE

JUDGEMENT

(1.) THIS is an application filed by M/s. Solomon Foundry for waiver of predeposit and stay of recovery of the penalties imposed under Sections 76, 77 and 78 of the Finance Act, 1994 (the Act) by the revisional authority, the Commissioner of Central Excise, Trichy. The appellants were found to have rendered the 'Maintenance and repair service' during the material period 01.07.2003 to 31.12.2005. Out of the total service tax liability of Rs. 3,59,853/ -, the appellants paid an amount of Rs. Three lakhs before issue of show cause notice and paid the balance amount before adjudication.

(2.) The original authority while finding the assessee's liability to pay service tax observed that the default in payment or service tax had been occasioned by bonafide belief of the appellants that they were not required to pay service tax on the activity undertaken by them during the material period.

(3.) THE authorized representative of the appellants submits that when the relevant contract was executed between the appellants and its client ONGC, service in question had not been brought under the tax net. Therefore, the contract did not contain any specific provision to recover the service tax from its clients. Therefore, they had to absorb the tax liability and they were not in a position to pass on the same to its clients. On this and other grounds narrated in the appeal a lenient decision is prayed for. It is reiterated that a large body of case law supported waiver of penalty on a defaulting assessee if the tax due was paid before issue of show cause notice. In the instant case, most of the tax was paid before issue of show cause notice and the balance amount was paid before the dispute was adjudicated. She also relies on the following judicial authority in support of the above prayer for waiver of penalty imposed in the revisional order.