2007 (5) TMI 87 - AT - Service Tax

Penalty (Service tax) Revenue contended that appellant liable to pay penalty on this ground that service tax belatedly paid but before issuance of SCN and accordingly demanded service tax along with penalty Held that service tax demand sustained and penalty amount were rejected

Summary

Issues:
Appeal against Order-in-Original upholding service tax but setting aside penalties.

Analysis:
The appeal was filed against an Order-in-Original that confirmed the amount of service tax but set aside the penalties imposed on the respondent. Despite the absence of the respondents during the proceedings, the issue was deemed narrow enough to proceed with the appeal. The ld. JDR was heard, and the records were examined. The ld. Commissioner (Appeals) set aside the penalties based on specific findings outlined in Paragraphs 7 & 8 of the records.

The findings highlighted various key points:
1. There was a delay in paying the service tax, which was rectified before the issuance of the Show Cause Notice (SCN). Penalties were imposed under Section 76 and Section 77 of the Finance Act, 1994.
2. The appellant attributed the delay to the non-receipt of payments from the client, with some outstanding amounts. The SCN did not consider the delay in accordance with Rule 6 of the Service Tax Rules, 1994.
3. Reference was made to a specific scheme applicable during Nov./Dec. 04, which the appellant did not qualify for due to registration predating the scheme introduction.
4. The appellant claimed ignorance as a new and small assessee but cooperated with the department upon notification of the default, paying the demanded service tax and interest before the SCN. The decision of Hon'ble CESTAT Mumbai was cited to support the dispensation of penalties under Sections 76 & 77 based on Section 80 of the Finance Act, 1994.

The ld. Commissioner (Appeals) was found to have correctly applied the law during the relevant period, leading to a well-reasoned order-in-appeal. Consequently, the appeal filed by the Revenue was rejected. The judgment upheld the decision to set aside the penalties while confirming the service tax amount, based on the legal interpretations and circumstances presented during the case.

(Dictated in Court)