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Issues involved: Demand of service tax, penalty under Section 78 of Finance Act, 1994, non-payment of service tax, non-filing of returns, admission of tax liability, financial difficulty plea, abatement calculation.
Summary: The Appellate Tribunal CESTAT AHMEDABAD addressed a case where an amount of Rs. 3,46,589 was demanded as service tax with penalty under Section 78 of Finance Act, 1994 based on the appellant's Income Tax return for the period from 2003-2004 to 2006-2007. The appellant had registered in March 2004 but ceased paying service tax and filing returns from 2005-2006 onwards, with discrepancies in tax payments in the initial years. The appellant admitted the tax liability but failed to pay for 2 years post the order-in-original. The appeal before Commissioner (Appeals) was rejected due to the inability to produce additional evidence as per Rule 5 of Central Excise (Appeals) Rules, 2001. The Tribunal noted the appellant's failure to provide explanations for discontinuing tax payments and returns, as well as the delayed payment post the order-in-original. Despite no financial difficulty plea, the appellant argued improper service tax calculation due to lack of abatement for certain years. Considering this, the Tribunal directed the appellant to pre-deposit Rs. 1.5 lakh within 12 weeks, waiving the need for full payment as per Section 35 of Central Excise Act, 1944 applicable to service tax matters under Section 83. Compliance by 06.02.2012 would grant a stay against the recovery of the remaining service tax, interest, and penalty during the appeal's pendency.
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