2004 (3) TMI 3 - AT - Service Tax

Service Tax Delay in filing service tax return as unaware of the provisions of service tax - Penalty

Summary

Issues: Appeal against enhancement of penalty under Section 77 of the Finance Act, 1994.

Analysis:
1. The appellant filed an appeal against the order-in-appeal that increased the penalty from Rs. 45,400 to Rs. 1,27,300 by the Commissioner (Appeals-II), Central Excise and Customs, Jaipur.

2. The Commissioner (Appeals) enhanced the penalty citing Section 77 of the Finance Act, 1994. However, the appellant argued that they were not aware of the service tax provisions as it was a new levy, resulting in late filing of returns. They also contended that the assessing authority has the discretion to impose a lesser penalty when there is a mandatory penalty equal to the demand, referring to a previous Tribunal decision in the case of Escorts JCB Ltd. v. CCE, New Delhi.

3. The penalty was imposed for late filing of service tax returns, amounting to Rs. 45,400 under Section 77 of the Finance Act. Section 80 of the Finance Act states that no penalty shall be imposed if the assessee proves a reasonable cause for the failure. The Tribunal, considering the explanation for the delay in filing returns and the discretionary power of the assessing authority to reduce penalties, set aside the impugned order and allowed the appeal.

4. The Tribunal's decision was based on the provision in Section 80 of the Finance Act, which allows for the waiver of penalties if delays are explained. Additionally, the Tribunal's precedent in the case of Escorts JCB Ltd. v. CCE, New Delhi, supported the discretionary power of the assessing authority to lower penalties when a mandatory penalty equal to the demand is imposed.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the enhanced penalty and allowing the appeal based on the provisions of Section 80 of the Finance Act and the discretionary power of the assessing authority to reduce penalties in certain circumstances.