COMMISSIONER OF SERVICE TAX, BANGALORE Vs. LINCOLN HELIOS (INDIA) LIMITED

JUDGEMENT

(1.) The Revenue has preferred this appeal against the order passed by the Tribunal, which though upheld the action of the assessing authority in levying duty and interest on the services rendered but set aside the levying of penalty.

(2.) The assessee is a manufacturer and supplier of centralized lubrication system and it also undertakes erection and commissioning at site as a part of their business activity. They filed ST3 return for the period ending September 30, 2003 claiming exemption in respect of erection and commissioning service as the consideration paid for the said amount was also included in the excisable value of the final products. The commissioning, erection and service rendered in that connection was brought under the services with effect from July 1, 2003. The assessee did not pay the service tax on the value of commission and erection services on the ground that it forms part of the finished product and that they have paid the excise duty on the same. However, the authorities held that the assessee is liable to pay the service tax on the value of erection and commissioning services. Therefore, they levied the service tax, interest and penalty. Aggrieved by the same, the assessee preferred an appeal. The Commissioner of Appeals dismissed the appeal upholding the order passed by the assessing authority. Aggrieved by the same, the assessee preferred an appeal to the Tribunal. The Tribunal upheld the levy of service tax but set aside the order regarding imposition of penalty. The assessee has accepted the order of the Tribunal and paid the service tax and interest thereon on the commissioning and erection of services. It is the Revenue, which has preferred an appeal against the order of the Tribunal.

(3.) The learned counsel for the Revenue assailing the impugned order contends that the penalty payable under section 76 is automatic and there is no discretion left to the authorities to waive or reduce the penalty payable. Moreover, the Appellate Tribunal was in total error in coming to the conclusion that there are no mala fides on the part of the assessee without there being any material on record.