2006 (11) TMI 89 - AT - Service Tax

Penalty Alleged that appellant not paid service tax on the services rendered as DOLG operator and accordingly confirmed demand and imposed penalty on him Authority find the allegation right and demand and penalty sustainable

Summary

Issues:
Challenge against reduced penalties under Sections 76 and 77, confirmation of penalty under Section 78 by the Commissioner (Appeals).

Analysis:

1. The appellant contested the order of the Commissioner (Appeals) reducing penalties under Sections 76 and 77 from Rs. 1,59,258/- to Rs. 25,000/- and Rs. 15,100/- to Rs. 4,000/-, respectively, and confirming the penalty of Rs. 1,59,258/- under Section 78 of the Finance Act, 1994. The appellant, a service tax provider as a 'Clearing and Forwarding Agent,' was registered under Section 69 of the Act.

2. A show cause notice accused the appellant of receiving goods, providing security, and maintaining accounts for their principal, IOC Limited, Mumbai, as a Dealer Operated Lube Godown (DOLG) and later as an ad hoc CFA. The appellant received commissions for these services but failed to pay service tax for the earlier period. The Assistant Commissioner found the appellant liable for service tax evasion, failure to file correct returns, and suppression of taxable value, justifying penalties under Section 78.

3. The adjudicating authority confirmed the demand for service tax, adjusted the amount already paid, and imposed various penalties under different sections for non-compliance with tax regulations. The penalties included failure to file prescribed service tax returns, suppressing taxable service value, and non-disclosure of liability.

4. The appellate Commissioner upheld penalties imposed under Sections 76, 77, and 78, considering the appellant's failure to pay service tax for the earlier period despite registration and payment for subsequent periods. The Commissioner reduced some penalties but maintained the substantial penalty under Section 78.

5. The appellant argued for amnesty scheme benefits, citing precedents where penalties were waived for timely registration and tax payment. However, the department contended that the appellant was ineligible for the scheme due to prior registration and suppression of tax liability.

6. The judgment clarified that the amnesty scheme was for instant registration of non-registered service providers, not applicable to those already registered. The appellant's failure to file returns for the earlier period and suppression of taxable value disqualified them from the scheme, justifying penalties under Section 78.

7. The appellant's non-disclosure and failure to file returns for the earlier period indicated suppression of taxable services, reinforcing the penalty under Section 78. The judgment dismissed the appeal, upholding the penalties imposed for valid reasons based on the appellant's actions.

In conclusion, the judgment upheld penalties under Sections 76, 77, and 78 due to the appellant's failure to comply with tax regulations, non-disclosure of taxable services, and suppression of tax liability, rendering them ineligible for amnesty scheme benefits.