2010 (8) TMI 571 - AT - Service Tax

Waiver of pre-deposit - Penalty under Sections 76, 77 & 78 - The assessee did not respond to the several communications made by the first appellate authority - The assessee had belatedly filed ST-3 returns after issue of show cause notice - Therefore, penalties imposed by the adjudicating authority and sustained by the Commissioner (Appeals). Held that the show cause notice basic to the proceedings invoked non-existent provision Section 72 of the Act - The Commissioner (Appeals) did not give any finding justifying the order of the original authority - Prima facie, the order of the original authority and the impugned order are not sustainable - The assessee had already paid the tax due, applicable interest and also filed the tax returns - Waiver of pre-deposit of the amounts is allowed.

Summary

Issues:
1. Waiver of pre-deposit of penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994 for delayed payment of Service tax and late filing of returns.

Analysis:
The appellants sought waiver of penalties imposed on them for delay in filing returns, delay in payment of Service tax, and evasion of Service tax. The Order-in-Original confirmed the penalties, and the Commissioner (Appeals) upheld the decision. The key issue revolved around the imposition of penalties under Sections 76, 77, and 78 of the Act. The Commissioner (Appeals) noted the non-compliance with the pre-deposit order and sustained the penalties on their merits.

In the appeal before the Tribunal, the assessee challenged the order primarily based on the show cause notice invoking a non-existent provision, Section 72 of the Act, for demanding the Service tax liability. The appellants argued that they had already paid the confirmed service tax liability and requested a waiver of pre-deposit for the penalties. The Tribunal considered the submissions and found that the show cause notice incorrectly invoked Section 72, rendering the original authority's order and the impugned order unsustainable. As the assessee had already settled the tax liability, interest, and filed returns, the Tribunal allowed the application for waiver of pre-deposit.

The Respondent contended that Section 72 was applicable during the relevant period, and the assessee had not responded to communications from the first appellate authority, leading to delayed filing of returns. However, the Tribunal, upon reviewing the case records and submissions, found that the show cause notice erroneously cited Section 72. The Tribunal concluded that the penalties imposed were not justified, especially since the tax had been paid, interest settled, and returns filed. Consequently, the Tribunal allowed the waiver of pre-deposit of the penalties, deeming the original authority's order and the impugned order unsustainable.

In summary, the Tribunal granted the waiver of pre-deposit of penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994, as the show cause notice incorrectly cited a non-existent provision, rendering the penalties unsustainable in light of the assessee's compliance with tax obligations.