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2007 (7) TMI 47 - AT - Service TaxPenalty - Department contended that the appellant was made suppression of fact on the ground that they made payment of service tax after direction of department - After considering the fact matter allowed partly by the adjudicating authority
Issues: Alleged non-payment of service tax leading to penalty imposition
Analysis: 1. The appellant, a Commission Agent and Channel partner of M/s. Airtel, faced allegations of receiving a gross amount of taxable value involving service tax amounting to Rs. 2,56,876/- during a specific period. 2. The appellant contended that there was a dispute regarding the levy of service tax on the activity. They obtained registration for service tax payment on 30-11-2004 and paid the entire tax amount with interest from December 2004 to April 2005 before the show cause notice was issued on 30-5-2005. The appellant argued that there was no intent to evade tax as they had paid the tax before the notice was served, thus no penal provision should apply. 3. The Department, represented by the learned DR, supported the findings of the Commissioner (Appeals) stating that non-payment of tax was detected during scrutiny of M/s. Airtel's records. The Department viewed the situation as a clear case of suppression of facts with the intent to evade tax, justifying the imposition of penalties under various provisions. 4. Upon careful consideration of both sides and the relevant legal provisions, the Tribunal noted that Section 73 of the Finance Act, 1994, mandates penalties in cases of fraud, collusion, wilful misstatement, or suppression of facts to evade tax payment. However, since the appellant had paid the tax before the show cause notice, the penalty equal to the tax amount was deemed unjustified. Consequently, the penalty under Section 78 read with sub-section (3) of Section 73 was reduced from Rs. 2,57,000/- to Rs. 64,250/-. The Tribunal found no justification for penalties under other provisions and set them aside. The total penalty was reduced from Rs. 3,70,693/- to Rs. 64,250/-, with the appeal being rejected. (Dictated and pronounced in open Court)
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