2010 (9) TMI 572 - AT - Service Tax

Penalty u/s 76 and 77 - The appellant is a practicing Civil Engineer and providing service to various clients and receiving a gross amount from their clients - the appellant is registered with the service tax department from the year 2005 and paying Service Tax Returns under the category of Architect Service in time - Only during the year 2007-08 the appellant could not file the service tax return in time along with service tax due to the reasons that he was not having any accountant to calculate the appropriate service tax payable - The appellant himself has calculated and paid the service tax liability and filed the service tax return voluntarily, although late - The benefit of Section 80 of the Finance Act, 1994 has to be given to the appellant as held by this Tribunal in the case of Varsana Ispat Ltd. v. CCE - Penalty waived.

Summary

Issues:
Imposition of penalty under Section 76 and 77 of the Finance Act, 1994.

Analysis:
The appellant, a Civil Engineer registered as an Architect, appealed against penalties imposed for not filing service tax returns and paying service tax on time for the financial year 2007-08. The appellant argued that the benefit of Section 80 of the Finance Act should apply due to not having an Accountant to calculate the service tax amount. Citing a relevant case law, the appellant claimed that the penalty under Section 76 should be waived as the late payment was not due to mala fide intention. The appellant voluntarily paid the service tax and filed the return after realizing the mistake. On the contrary, the Departmental Representative (DR) argued that the penalties were rightly imposed due to a significant delay in payment and filing. Referring to other case laws, the DR contended that lack of staff to calculate service tax is not a valid ground for penalty reduction. The DR also highlighted that separate penalties can be imposed under different sections of the Finance Act and the appellant failed to provide a reasonable cause for penalty waiver under Section 80.

The Tribunal considered both sides' submissions and observed that the appellant had been compliant with service tax regulations since 2005 but faced challenges in the year 2007-08 due to the absence of an Accountant to calculate the service tax. Despite the delay, the appellant voluntarily paid the service tax and filed the return. Relying on a relevant precedent, the Tribunal held that the benefit of Section 80 should be granted to the appellant. The Tribunal distinguished the cited case laws brought by the DR, emphasizing that the circumstances were different, as the appellant was an individual Civil Engineer without sufficient staff, unlike the companies in the referenced cases. Consequently, the Tribunal waived the penalty under Section 76 of the Finance Act, 1994, in favor of the appellant, citing the applicability of Section 80. The appeal was disposed of accordingly.