2013 (8) TMI 910 - AT - Service Tax

Imposition of penalties u/s 76 and 78 - invocation of section 80 - the appellant s case is that major amount of tax with interest was paid before the issuance of SCN - Held that - The present appellant is a lady who took over the working of the appellant only from 2005-2006 onwards and the entire disputed Service Tax along with interest, was paid - It is not the case of the Revenue that appellant has recovered the Service Tax from the service recipients and retained the same. No specific fact has been disclosed in SCN as to how there was wilful misstatement/suppression on the part of the appellant with an intention to evade Service Tax - this is a fit case for invocation of section 80 - penalty set aside - appeal allowed - decided in favor of assessee.

Summary

Issues: Appeal against penalties under Sections 76 and 78 of the Finance Act, 1994 based on the applicability of Section 80.

Analysis:

The appellant contested that penalties were not imposable as they had paid the entire duty and interest, invoking Section 80 of the Finance Act, 1994. The appellant's representative argued that the Service Tax amount and interest were paid before the Show Cause Notice was issued. It was highlighted that the appellant's business was managed by different individuals during the demand period, and the current appellant, a lady, took over the business later. The appellant emphasized the absence of wilful suppression to evade Service Tax and relied on a relevant judgment. The appellant's position was that penalties should not be imposed based on the provisions of Section 80.

The Revenue representative argued that no reasonable cause existed for the non-payment of Service Tax, asserting that Section 80 did not apply, and penalties under Sections 76 and 78 were correctly upheld by the first appellate authority.

Upon hearing both sides and examining the case records, it was noted that the appellant paid a significant portion of the demanded amount before the Show Cause Notice was issued. The appellant, a lady who started managing the business later, paid the disputed Service Tax and interest. The judgment highlighted that there was no evidence of the appellant recovering Service Tax from recipients and retaining it. The Show Cause Notice lacked specific details on wilful misstatement or suppression by the appellant to evade Service Tax. Consequently, it was deemed a suitable case for invoking Section 80 of the Finance Act, 1994. The appeal against penalties under Sections 76 and 78 was allowed based on this analysis.