2010 (7) TMI 745 - AT - Service Tax

Delay in payment of tax - appellants submits that failure to pay service tax and to follow other statutory formalities by the appellants had been occasioned by reasons beyond his control. He had to visit his native place in Uttar Pradesh frequently during the material period for treatment of his father, who was ailing and eventually expired on 4.12.2007. The relevant death certificate is on record. He submits that there was no intention on the part of the assessee to evade the impugned tax Held that - appellants already paid the service tax and the interest found due from them before issuance of the show-cause notice, allegation of intention to evade service tax is absent in this case, penalties imposed under Sections 78 and 77 of the Act may not be sustainable. However, the penalty imposed under Section 76 is on a different footing. The same is imposed for delay in payment of tax during the material period. Section 76 provides for imposing penalty ranging from Rs. 100 to Rs. 200/- per day. In the facts of the case, the maximum penalty provided under this Section is apparently not imposable, there shall be waiver of pre-deposit and stay of recovery of the balance dues adjudged against the appellants pending decision in the appeal.

Summary

Issues:
Impugned order confirming dues against the appellant for two periods. Appellant's failure to discharge tax liability and subsequent payment before show-cause notice. Application for waiver of pre-deposit of penalties due to uncontrollable circumstances. Dispute over sustainability of penalties under Sections 76, 77, and 78.

Analysis:

1. The impugned order upheld by the original authority confirmed dues against the appellant for two periods, totaling Rs. 3,63,465/-. The appellant, a maintenance and repair service provider, failed to discharge tax liability from October 2006 to September 2007 but paid the entire service tax and interest before the show-cause notice was issued. Late fee under Section 70 was also paid for delayed filing of returns.

2. The appellant sought waiver of pre-deposit of penalties, attributing the non-compliance to reasons beyond their control, specifically, frequent visits to attend to an ailing father who eventually passed away. The appellant argued that the penalties imposed were excessive, given the absence of intent to evade tax, as acknowledged by the original authority.

3. The appellant's advocate contended that penalties under Sections 76, 77, and 78 were not sustainable due to the lack of intention to evade tax. The learned JDR, however, argued in favor of sustaining the penalties, citing the violation involved in the case. The Tribunal noted that while penalties under Sections 77 and 78 may not be sustainable due to the absence of intent to evade tax, the penalty under Section 76 for delayed tax payment was justified.

4. After reviewing the case records and submissions, the Tribunal found that the appellant had already paid the service tax and interest before the show-cause notice, indicating no intent to evade tax. Consequently, penalties under Sections 77 and 78 were deemed not sustainable. However, the penalty under Section 76, imposed for delayed tax payment, was considered valid, albeit not at the maximum rate provided by the section.

5. The Tribunal ordered the appellant to deposit Rs. 1,15,300/-, representing a penalty at Rs. 100/- per day for the delay in tax payment. This amount was to be deposited within eight weeks, with compliance to be reported by a specified date. Upon compliance, pre-deposit waiver and stay of recovery of the remaining dues were granted pending the appeal's decision.