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Issues involved: Waiver of pre-deposit of penalties u/s 76, 77, and 78 of the Finance Act, 1994.
Waiver of pre-deposit u/s 76: The appellant argued financial hardship due to non-payment by a client, leading to inability to pay service tax. The appellant voluntarily paid the service tax along with interest before the show cause notice was issued. The contention was made in light of Section 73(3) of the Finance Act, 1994, which exempts show cause notice when the tax is voluntarily paid. The Departmental Representative disagreed, stating that the appellant collected but failed to pay the service tax. The tribunal considered the circumstances and decided to fully waive the pre-deposit of penalties, as the tax had been paid before the notice was issued, preventing coercive measures until the appeal is decided. Waiver of pre-deposit u/s 77: The impugned order required the appellant to pre-deposit Rs. 1000 under Section 77 of the Finance Act, 1994. The appellant's financial hardship was explained, attributing it to a client's non-payment. Despite collecting the service tax, the appellant faced challenges in paying it. The appellant cleared the tax liability with interest before the show cause notice was issued. The tribunal, after considering the arguments, decided to fully waive the pre-deposit of penalties until the appeal is resolved, preventing any coercive actions during this period. Waiver of pre-deposit u/s 78: The appellants were directed to pre-deposit Rs. 71,92,463 under Section 78 of the Finance Act, 1994. Financial difficulties were highlighted, mainly due to a client's outstanding amount. The appellant, although collecting the service tax, struggled to remit it to the department. However, before the show cause notice was served, the appellant paid the service tax along with interest. The tribunal, after careful consideration, decided to grant full waiver of the pre-deposit of penalties until the appeal is finalized, ensuring no coercive measures are taken during this period.
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