2006 (12) TMI 532 - AT - Service Tax

Summary

Issues involved: Imposition of penalty for default in payment of service tax u/s 73(1) of the Finance Act, 1994.

Summary:
The appeal was filed regarding the penalty imposed for default in paying service tax between May 2003 and September 2003. The appellant, an Air Travel Agent, allegedly short paid the service tax amounting to Rs. 31,367, which was paid after receiving a show cause notice. The appellant, a Public Sector Undertaking, was unaware of the increase in service tax rates and promptly paid the differential amount upon receiving the notice. The appellant argued that it was a bona fide error and cited a relevant Tribunal decision. The Department reiterated the findings of the Commissioner (Appeals).

Upon review, it was found that the appellant had paid the service tax at the old rate within the stipulated period and had filed returns accordingly. Considering the appellant's status as a public sector undertaking and the genuine error in payment, the imposition of penalty was deemed unjustified. Therefore, the impugned order was set aside, and the appeal was allowed with consequential relief to the appellant.