2014 (4) TMI 1061 - HC - Service Tax

Penalty u/s 76 & 78 - whether Tribunal erred in upholding the penalty under Sections 76 and 78 of the Finance Act of 1994 - Held that - The liability to pay Service Tax is in accordance with the Finance Act 1994 as the taxable services involved in the matter was for the period from April 2000 to March 2004. The decision of this High Court referred above in Krishna Poduval s case (2005 (10) TMI 279 - Kerala High Court) was also prior to Finance Act 2008 which made a remarkable distinction between Sections 76 and 78 of Service Tax Act. As the period in question relates prior to Finance Act 2008 the assessing authority and later the Tribunal were justified in placing reliance on Krishna Poduval s case (2005 (10) TMI 279 - Kerala High Court) by the High Court of Kerala. - at the relevant point of time prior to Finance Act 2008 penalty could be imposed under both the provisions and it is for appellant/assessee to convince authorities concerned by evidence that they are not liable to pay Service Tax and that there is justification in the defence raised by them regarding refund of the amounts - Decided against assessee.

Summary

Issues:
1. Whether the Tribunal erred in upholding the penalty under Sections 76 and 78 of the Finance Act of 1994.

Analysis:
The entire issue revolves around whether the Tribunal erred in upholding the penalty under Sections 76 and 78 of the Finance Act of 1994. The appellant's billing statements from April 2000 to March 2004 were under scrutiny due to alleged evasion of Service Tax. The company remitted an amount towards part payment of Service Tax only on 11-6-2004. The investigating officers had information suggesting that the appellant was evading Service Tax on a large scale. The first appellate authority found that correct Service Tax was not paid during the mentioned period and that the appellant did not file periodical returns, leading to penalties under Sections 76 and 77 of the Finance Act of 1994.

Regarding the defense put forth by the appellant, they disputed the quantity of tax due but did not deny the liability to tax. They claimed to have received a refund from certain airlines, which they argued should have been considered in calculating the tax liability. However, they failed to provide convincing proof of these claims. The Additional Commissioner concluded that the Service Tax was not paid, and the actual value of taxable services was suppressed, thus justifying penalties under Sections 76 and 78 of the Finance Act of 1994.

The appellant challenged this decision before the first appellate authority, which referred to relevant judgments to modify the order-in-original. However, the Department appealed to the Appellate Tribunal, which, considering a High Court judgment, found no justification for setting aside the assessing authority's orders. Consequently, the appeal filed by the Revenue was allowed. The High Court observed that the liability to pay Service Tax was in accordance with the Finance Act, 1994, as the taxable services in question were provided from April 2000 to March 2004. Since the period in question predated the Finance Act, 2008, both Sections 76 and 78 were found to be applicable, and the appellant failed to provide sufficient evidence to justify their defense or challenge the penalties imposed. Therefore, the appeal was dismissed.