1999 (10) TMI 698 - AT - Service Tax

Service Tax Penalty for delay in filing of return and the reason of delay was imposition of a new tax Penalty reduced

Summary

Issues:
1. Interpretation of Section 77 penalty provisions.
2. Application of penalty for delayed filing of service tax returns.
3. Consideration of unintentional delays and past judgments for penalty imposition.

Analysis:

1. The primary issue in this case pertains to the interpretation of the penalty provisions under Section 77 of the Act. The appellants, who are Service Tax assessees, argued that the penalty should not be calculated on a daily basis but should be a total sum between Rs. 100/- and Rs. 200/-. The Commissioner dismissed the appeal, leading to the present appeal before the Tribunal.

2. Section 70 of the Act mandates the filing of quarterly returns within 15 days of the end of the preceding quarter. Subsequent subsections deal with situations where returns are not filed on time and provide for reminders to be issued to the assessee. The penalty under Section 77 for failure to furnish the prescribed return is between Rs. 100/- and Rs. 200/ per day of delay. The wording of the section raises concerns regarding the requirement of a notice before imposing the penalty.

3. The Tribunal considered past judgments where leniency was shown towards assessees due to the initial introduction of Service Tax and unintentional delays in filing returns. The appellants argued that the delays were unintentional, and the service tax had already been deposited by their clients. Citing relevant judgments, the Tribunal reduced the total quantum of penalty to Rs. 2,000/- considering the circumstances.

In conclusion, the Tribunal upheld the penalty under Section 77 to be calculated on a daily basis for delays in filing service tax returns. However, considering the unintentional nature of the delays and past judgments showing leniency in similar cases, the total penalty was reduced to Rs. 2,000/-. The appeal was dismissed with this modification.