G.R. Sharma, Technical Member. -M/s. Mohan Industrial Security Services, Faridabad has filed this appeal against imposition of penalty of Rs. 1,05,185 because of late submission of the service tax return in Form ST-3.

2. The facts of the case in brief are that the appellants were issued a show-cause notice asking them to explain as to why penal action under sections 76 and 77 of the Finance Act, 1994 should not be taken against them for late registration, late payment of service tax and late submission of ST-3 returns. In reply 1 to the show-cause notice, the appellants stated that before March, 2000, they were not aware that service tax had been imposed on security agencies with effect from 16-10-1998; that they came to know about imposition of service tax on security agencies only during survey operation in March, 2000. It was also contended that at the moment they came to know, they applied for registration and that before the adjudication of the case, they had paid the entire amount of taxes. The Asstt. Commissioner adjudicated the case as above and when the appellant filed an appeal, the Commissioner (Appeals) held :

"I do not find that a case is made out for waiving any of the penalties imposed under section 80 of the Finance Act, 1994."

It was also observed by the Commissioner (Appeals) that the appellants had already paid the amount of interest for late payment of service tax and levy of service tax also.

3. Arguing the case, Shri K.S. Negi, Ld. consultant submits that there was a lot of confusion about the levy of service tax. He submits that the appellant was not aware about the levy of service tax till March, 2000. He submits that as soon as he came to know about imposition of service tax, service tax along with interest for late payment was paid. He submits that it was because of the confusion about levy and collection of service tax, that, there was a delay in getting the registration. Ld. consultant, therefore, prays that levy of penalty may be set aside. Ld. consultant submits that this Tribunal in the case of CCE v. Milan Tent Palace 2001 (131) ELT 274 (Trib. - Delhi) held that imposition of penalty is discretionary; that penalty of minimum of Rs. 100 per day was not compulsory and in deserving cases, can be waived off. He submitted that this was a deserving case and, therefore, penalty imposition may be waived.

4. Shri R.C. Sankhla, Ld. Departmental Representative submits that the appellant had not got themselves registered before March, 2000 though service tax levy and payment became effective from 16-10-1998. He submits that during the period, levy of penalty was mandatory. He submits that ignorance of law is no excuse nor it can be treated leniently. He, therefore, prays that the appeal may be rejected. Ld. Departmental Representative in support of his contention cited and relied upon the Tribunal’s decision contained in Final Order No. 186/2001-D, dated 29-8-2001.

5. We have heard the rival submissions. We note in the instant case that service tax was levied under the Finance Act, 1998 which became effective from 16-10-1998. Service tax for the first time was imposed under the Finance Act, 1998. There was some confusion as to which services are taxable under this provision. However, the fact remains that tax on security services was leviable with effect from 16-10-1998 and, therefore, the first question that arises is whether the tax should be levied or collected with effect from 16-10-1998. There cannot be any dispute on this point and, therefore, service tax on security services is chargeable from 16-10-1998.

6. The second question that arises is about imposition of penalty on late submission of returns. We find that under the Service Tax Rules, the appellants were required to file quarterly returns under section 76. There was a provision that a penalty of Rs. 100 subject to a maximum of Rs. 200 shall be leviable for each day’s delay. This Tribunal in the case of Milan Tent Palace (supra) has already held