2011 (8) TMI 547 - AT - Service Tax

Demand for service tax, interest and penalty - under sections 76 and 77 - no option has been given to the appellants to pay service tax, interest and penalties within 30 days from the date of receipt of order - Held that - the decision of the Hon ble High Court of Delhi in the case of KP Pouches (P) Limited vs. UOI 2008 -TMI - 30328 - HIGH COURT OF DELHI ,Tribunal can extend such option - Therefore, if the appellants deposit the entire amount of service tax with interest and penalty under sections 76 and 77 within 30 days from the date of receipt of this order, option to deposit 25% of service tax towards penalty imposed under Section 78 is extended.

Summary

Issues:
Demand of service tax, interest, and penalty confirmed; Appellants seeking extension to discharge liabilities within 30 days to avail reduction in penalty under Section 78 of Finance Act, 1994.

Analysis:
The judgment delivered by Mr. B.S.V. Murthy of the Appellate Tribunal CESTAT, Ahmedabad, addressed the issue of penalty under Section 78 of the Finance Act, 1994. The Appellants did not contest the demand for service tax, interest, and penalties under Sections 76 and 77. However, they sought an extension to pay the liabilities within 30 days to benefit from the reduction in penalty under Section 78. The Tribunal considered the limited issue of penalty under Section 78 in line with previous decisions, including the case of M/s. Swati Chemicals Industries & Others and CCE Ahmedabad vs. M/s. Akash Fashion Prints Pvt. Limited. Based on these precedents, the Tribunal decided to waive the pre-deposit requirement and proceed with the appeal for a final decision.

In light of the Appellants' submission and the absence of an option to pay the entire amount within 30 days as mandated by previous court decisions, the Tribunal extended the option to deposit 25% of the service tax towards the penalty imposed under Section 78. The Tribunal emphasized that if the full amount of service tax, interest, and penalties, along with the 25% of service tax towards the penalty under Section 78, were not paid within 30 days, the penalty under Section 78 would be equivalent to the service tax demanded. The stay petition and appeal were disposed of under these terms, providing clarity on the payment requirements and consequences for non-compliance.

This judgment underscores the importance of adhering to statutory provisions and court decisions regarding the payment of service tax, interest, and penalties under the Finance Act, 1994. It highlights the Tribunal's discretion to extend payment options in specific circumstances to ensure fairness and compliance with legal requirements. The decision serves as a reminder for taxpayers to fulfill their financial obligations within the stipulated timelines to avoid additional penalties and legal consequences.