Setback for Pondicherry Engineering College: CESTAT Upholds Service Tax on Technical Testing & Analysis Services, Penalty Waived [Read Order]
CESTAT upheld service tax and interest on Pondicherry Engineering College’s technical testing services but waived the penalty for lack of intent to evade.
Pondicherry Engineering College - Taxscan
Pondicherry Engineering College - Taxscan
The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that Pondicherry Engineering College is liable to pay service tax on “Technical Testing and Analysis Services” along with interest but the penalty imposed was set aside.
Pondicherry Engineering College, the appellant, had provided technical testing services to Numeric Power Systems, Puducherry. During verification, it was found that service tax amounting to Rs. 3,42,367 was payable. A show cause notice was issued proposing demand of tax, interest, and equal penalty.
The adjudicating authority confirmed the demand and penalty, which was upheld by the Commissioner (Appeals). Aggrieved by this, the appellant filed the present appeal before the tribunal.
The appellant’s counsel argued that in an earlier decision of the tribunal, service tax liability was upheld but penalty was waived on the ground that the institution was acting under a bona fide belief of being a non-profiteering educational institution. They requested setting aside the penalty on similar grounds.
The revenue counsel argued that the appellant was liable to pay service tax and pointed out that the concept of being a non-profiteering institution had no relevance under the Finance Act, 1994. The revenue explained that both the adjudicating authority and the Commissioner (Appeals) had rightly confirmed the penalty.
The two-member bench comprising Ajayan T.V. (Judicial Member) and M. Ajit Kumar (Technical Member) observed that in an earlier decision dated 25.01.2017, the tribunal had already ruled against the appellant on the issue of tax liability but had waived the penalty. The tribunal explained that judicial discipline required consistency and uniformity in decisions and no new facts had been produced to alter the earlier ruling.
The tribunal upheld the demand for service tax and interest but set aside the penalty, holding that there was no deliberate intention on the part of the appellant to evade tax. The appeal was partly allowed.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
