2004 (1) TMI 2 - AT - Service Tax

Service Tax Mandap Keeper (1) Service tax on mandap keeping (2) Delay in filing of return (3) Penalty

Summary

Issues: Stay application for waiver of pre-deposit of penalty under Section 77 of the Finance Act, 1994; Appeal against Commissioner (Appeals)'s order.

The judgment pertains to a case where a charitable organization, primarily engaged in community welfare work, inadvertently failed to pay service tax as Mandap keepers for renting out a hall. The organization, run by a managing committee of senior citizens, applied for registration once they became aware of the tax liability. The original authority imposed a penalty of Rs. 32,700 for delayed filing of returns, which was later reduced from Rs. 1,02,000. The Commissioner (Appeals) upheld the penalty citing a daily penalty provision introduced from July 1997. The appellants argued that the penalty was not mandatory up to Rs. 100 per day, and without mens rea, it should not be imposed, especially since they had paid the entire service tax with interest before any show cause notice.

The Tribunal referred to a previous case and noted that Section 80 of the Finance Act, 1994 provides for no penalty if the assessee proves a reasonable cause for the failure under Section 77. Considering the nature of the organization's activities, the voluntary payment of all taxes, and the composition of the managing committee, which is involved in charitable work, the Tribunal found that the appellants met the requirements of Section 80. Consequently, the penalty of Rs. 32,700 was set aside. The Tribunal waived the pre-deposit of penalty and proceeded to consider the appeal on its merits. Ultimately, the Tribunal disposed of the stay application and the appeal in favor of the appellants.