2006 (10) TMI 34 - AT - Service Tax

Penalty(Service tax)-Alleged that appellant were liable to pay service tax with interest-After considering all the fact penalty impose on him were reduced

Summary

Issues:
Appeal against demand of service tax and penalty imposition.

Analysis:
The appellant filed an appeal against the impugned order confirming the service tax demand and imposing a penalty. The appellants did not contest the demand but challenged the penalty imposition. They argued that they registered and paid service tax under a Scheme by the Government of India, which promised no penal action for timely registration and tax payment. Citing a previous case, the appellants claimed that they should benefit from the Scheme. However, the Revenue contended that the appellants were not covered under the Scheme as they were already registered but had not paid the tax, making them liable for penalty.

The Tribunal found that the appellants paid the service tax and interest during the operation of the Amnesty Scheme. Referring to the previous case, the Tribunal concluded that the benefit of the Scheme applied to those who paid tax during its continuation. The Tribunal held that the appellants were not eligible for a refund of the penalty already paid but set aside the remaining penalty amount. The Tribunal highlighted the provisions of the Finance Act and the Government's Amnesty Scheme, emphasizing the aim to encourage service tax compliance. The Tribunal's decision was based on the principles of the Scheme and the appellant's compliance with tax payment.

The Tribunal clarified that the appellants, having accepted the liability to pay tax and interest, were not entitled to a refund of the penalty already paid. The impugned order was set aside concerning the penalty imposed under various sections of the Finance Act, with the excess penalty amount paid by the appellants being returned. The Tribunal's decision was in line with the previous case and the provisions of the Amnesty Scheme, ensuring that the appellants, despite their initial non-compliance, benefitted from adhering to the tax requirements during the Scheme's operation. The appeal was allowed based on these considerations.