2006 (12) TMI 450 - AT - Service Tax

Summary

Issues involved: Interpretation of sections 76 and 77 of the Finance Act, 1994; applicability of section 80 of the Finance Act, 1994 in penalty imposition cases.

In the judgment by Appellate Tribunal CESTAT CHENNAI, the appellant was contesting penalties imposed under sections 76 and 77 of the Finance Act, 1994 for not paying service tax on taxable services rendered during a specific period. The appellant claimed the benefit of section 80 of the Finance Act, 1994, which states that no penalty shall be imposed if the assessee proves reasonable cause for the failure. The appellant argued that they had no intention to evade payment, promptly paid the tax upon realizing their liability, and believed they were not rendering taxable services. The original authority found no intention to evade tax and ruled in favor of the appellant, which the Revenue did not challenge. The Tribunal held that penalties should not have been imposed as the appellant had shown reasonable cause for the delay in paying tax, citing relevant case law. Therefore, the impugned order was set aside, and the appeal was allowed.