2016 (11) TMI 1458 - AT - Service Tax

Penalty u/s 78 of FA, 1994 - case of appellant is that Non-compliance to the provisions of Service Tax is merely because the appellant was not aware about the statutory provisions of the service tax - Held that - when the assessee is not disputing his liability for discharging the statutory obligations and has paid the entire tax along with the interest and thereafter discharging his obligations as a taxpayer, in view of the provisions of Section 73 (4A) the proceeding should be deemed to have been concluded - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Waiver of penalty under Section 78 of the Finance Act, 1994.

Analysis:

Issue 1: Waiver of Penalty
The appeal in this case pertains to the waiver of a penalty of ?9,34,692 imposed under Section 78 of the Finance Act, 1994. The appellant, a registered Government Contractor engaged in construction and civil contracts, was issued a Show Cause Notice (SCN) in October 2012. The Order-in-Original (OIO) dated December 2013 confirmed a demand for service tax along with interest and imposed a penalty under Section 78. The appellant contended that there was no fraud or willful misstatement, attributing non-compliance to a lack of awareness of service tax provisions. The appellant did not dispute the demand, paid the entire amount, and argued for setting aside the penalty based on their conduct.

Issue 2: Adjudication and Payment
The Commissioner, in the adjudication order, confirmed a demand of ?9,34,692, significantly less than the original demand. The appellant had paid the service tax and interest before appealing to the Tribunal, indicating a bona fide belief that the services provided were not taxable under the Finance Act, 1994. The Tribunal observed the payments made by the appellant prior to the appeal, which demonstrated compliance with their tax obligations. Referring to Section 73(4A), the Tribunal noted that when an assessee does not dispute liability, pays the tax and interest, and fulfills obligations, proceedings should be deemed concluded.

Issue 3: Legal Precedent and Conclusion
In its decision, the Tribunal cited the case of Motilal Padampat Sugar Mills Co. Ltd. Vs. State of Uttar Pradesh, emphasizing the concept of "reasonable cause" as a factor in determining penalties. The Tribunal, considering the appellant's actions and compliance, set aside the penalty imposed under Section 78 of the Finance Act, 1994. The appeal was allowed concerning the imposition of the penalty under Section 78.

This judgment highlights the importance of compliance, good faith efforts, and the payment of taxes and interest in tax-related matters. The decision underscores the significance of demonstrating a reasonable cause and fulfilling statutory obligations to seek relief from penalties under the law.