2005 (7) TMI 657 - AT - Service Tax

Summary

Issues: Imposition of penalties under sections 76, 77 & 78 of the Finance Act, 1994 without proper justification.

Dr. S.L. Peeran, the Judicial Member, and T.K. Jayaraman, the Technical Member, considered the appeal and stay application together, focusing on the challenge related to the penalties imposed under sections 76, 77 & 78 of the Finance Act, 1994. The appellant, claiming to be an architect with limited work, was found to owe service tax of &8377; 35,901 for a specific period. Due to hardships and other circumstances, the appellant defaulted in payment and argued that the service tax was not paid for those reasons. The counsel contended that the penalties imposed were unjustified, emphasizing that the authorities had not provided any reasoning or findings for the penalties under these sections. The appellant's explanation for the delayed payment was not adequately considered, and it was suggested that a warning or a nominal penalty would have sufficed.

The learned SDR argued that ignorance of the law does not excuse non-compliance with the Finance Act's provisions regarding service tax payment, asserting that the penalties were warranted. However, upon careful examination, the Tribunal noted the absence of valid reasons from the authorities for imposing such substantial penalties. The appellant's circumstances and explanations were not properly taken into account. Considering that this was the appellant's first offense and acknowledging their newness to the field, the Tribunal deemed a nominal penalty appropriate in this case to serve the interests of justice. Consequently, the Tribunal modified the impugned order, directing the appellant to pay a penalty of &8377; 1,000 each under sections 76, 77, and 78, thereby disposing of the appeal accordingly.