2016 (4) TMI 1278 - AT - Service Tax

Penalty u/s 76, 77 and 78 - delayed payment of service tax - Foreign Commission Agents - reverse charge mechanism - Held that - similar issue decided in appellant s own case for the earlier period on similar issue M/s. RSWM Ltd. Versus CCE, Jaipur-II 2016 (11) TMI 1363 - CESTAT NEW DELHI , where it was held that in absence of any malafide on the part of the appellant, the imposition of penalty upon them is not justifiable - by invoking section 80, penalty is thus set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenges to imposition of penalties for failure to pay dues on reverse charge basis.

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi involved appeals challenging penalties imposed on the assessee for failure to pay dues on a reverse charge basis, despite having paid the entire tax and interest. The appellant, engaged in manufacturing and exporting yarn, availed the services of Foreign Commission Agents for selling goods in foreign countries. Demands were raised for the period April 2006 to March 2008, and the dues were deposited between 09/3/2009 to 25/03/2009. Subsequently, show cause notices were issued proposing penalties under Sections 76, 77, and 78 of the Finance Act, 1994, leading to the impugned order.

The appellant contested the penalties in the impugned order, citing a previous Tribunal decision in a similar matter involving the same appellant. The Tribunal's earlier order clarified the law based on a judgment by the Bombay High Court, which brought clarity to the confusion prevailing in the field. The Tribunal noted that the appellant had paid the dues within three weeks of the High Court's decision, and in a similar situation, Section 80 was invoked to extend benefits to the appellant. Consequently, the Tribunal held that in the absence of any malafide intent, the imposition of penalties was unjustifiable and set them aside. However, the demand for tax and interest was confirmed as uncontested.

Given the extension of benefits under Section 80 to the appellant in a previous dispute for the same period, the Tribunal applied the same reasoning to set aside the penalties in the present appeals as well. It was emphasized that the demand for tax and interest was confirmed as uncontested.