By TIOL News Service

MUMBAI, JAN 16, 2013: THE appellant started security agency in the year May 1997 under the name and style as Jai Jawan Securities under the proprietorship of Shri S.N.Mahajan . In May 2002, Shri Mahajan changed the name of the security agency to Veer Jawan Securities Services and applied for registration to the department on 28.11.2003.

On the basis of statement of Shri S.N.Mahajan , a SCN dated 08.4.2004 was issued demanding service tax of Rs.3,54,202/- for the period 16.10.1998 to September 2003. The show-cause notice was adjudicated, demand of Rs.3,04,693/- was confirmed along with penalty under Sections 75A, 77 and 78.

In denovo proceedings consequent upon the matter being remanded by the Commissioner(A), the demand was re-quantified as Rs.2,42,270/- along with interest and equal amount of penalty u/s 78 of the FA, 1994 along with penalty u/s 75A of Rs.500/- and u/s 77 of Rs.1000/-.

Against this order, the appellant is before the CESTAT.

It is submitted that the demand has been raised against the assessee namely Veer Jawan Securities which came into existence in May 2002 and hence the demand for the period prior to May 2002 is not sustainable; that as there is no allegation of suppression or misrepresentation etc. in the show-cause notice, therefore, penalty under Section 78 is also not sustainable.

The Revenue representative submitted that in the statement recorded during the course of investigation, Shri S.N.Mahajan himself had admitted that he started securities agency in 1997 under the name and style of Jai Jawan Securities and in May 2002 they have changed Jai Jawan Securities to Veerjawan Securities Services although activity has been undertaken by the same person and, therefore, demands have rightly been quantified. It is further submitted that these activities of the appellant continued till 2003 and no registration was applied by the appellant which implied that the appellant has suppressed the fact of their activity from the department and, therefore, the lower authorities had rightly invoked the provisions of Section 78 of the FA, 1994 and accordingly the impugned order is to be upheld.

The Bench observed -

“6. On perusal of the record and contention of both sides, I find that in this case the person involved in the activity of providing security agency is Shri S.N.Mahajan who started the business of security agency in May 1997 in name and style of Jai Jawan Securities and in May 2002 changed the name to Veerjawan Securities. I do not agree with the contention of the ld. representative of the appellant that assessee is Veerjawan Securities Services and not Shri S.N. Mahajan. In fact proprietorship concern is known by the proprietor of the firm and there is no entity can be identified without the proprietor. Therefore, the person providing the service is only Shri S.N.Mahajan whether he is providing the services in the name of Veerjawan Securities or Jai Jawan Securities. Therefore, I hold that demands have been rightly quantified by the lower authorities for the period 16.10.1998 to 30.09.2003. Accordingly, impugned demand of Rs.2,42,270/- is confirmed along with interest.

7. I have perused the show-cause notice and in the show-cause notice, no allegation has been made against the appellant for fraud, collusion, willful mis-statement or suppression of fact or contravention of provisions with an intent to evade payment of service tax. As no specific allegation has been made in the show-cause notice, therefore the penalty under Section 78 cannot be imposed as the show-cause notice is the foundation of the case, therefore penalty under Section 78 is waived. Penalty under Section 75A and 77 stands confirmed.

The appeal was disposed of in above terms.

(See 2013-TIOL-96-CESTAT-MUM)