2011 (9) TMI 699 - HC - Service Tax

Penalty - courier service - Assessee has paid service tax though not regular, he had paid an amount of Rs. 38,378/- prior to issue of show cause notice and after the issue of show cause notice, an amount of Rs. 92,305/- was paid - When two fact finding authorities have held the non-payment of service tax was not intentional, it was not with any intention to avoid tax, considered the circumstances in which the assessee was placed and reduced the penalty payable, it cannot be said that the said order suffers from any legal infirmity - The contention that once there is a default, the payment of penalty is automatically unsustainable in view of the language employed in Section 80 of the Act, where if a sufficient cause is made out for the default under any of these provisions, then no penalty shall be imposed - Decided in favor of the assessee

Summary

Issues:
Appeal against reduction of penalties by Appellate Authority.

Analysis:
The case involved an appeal by the Revenue challenging the reduction of penalties imposed by the assessing authorities from Rs. 1,11,769 to Rs. 10,000. The assessee, engaged in providing courier services, had paid the Service Tax amount but failed to file the Service Tax Return. Despite paying a significant amount towards service tax, the assessing authority confirmed the demand and imposed a penalty. The Appellate Authority, after re-evaluating the evidence, accepted the cause shown by the assessee as sufficient and reduced the penalty to Rs. 10,000. The Tribunal upheld this decision.

The key contention revolved around whether the non-payment of service tax was intentional or if there was a sufficient cause for the default. The Tribunal, considering the circumstances of the assessee and the fact that the default was not intentional to avoid tax, found no legal infirmity in reducing the penalty. The judgment emphasized that under Section 80 of the Act, if a sufficient cause is shown for the default, no penalty shall be imposed. As both fact-finding authorities concluded that the default was not intentional and the penalty reduction was justified, no substantial question of law arose for consideration. The order passed by the Tribunal was deemed legally sound and did not warrant interference.

In conclusion, the appeal was dismissed, and no costs were awarded. The judgment favored the assessee, upholding the reduction of penalties based on the sufficient cause shown for the default in payment of service tax.