2012 (6) TMI 553 - AT - Service Tax

Penalty - short payment due to calculation mistakes - there was excess payment in respect of three years and the short levy was only during one year namely 2006-07 Held that - it was not a fit case for invoking Section 78 of the Finance Act implying that there was no intention to evade service tax - Appellants have paid the service tax along with interest though the same appears to be time barred. Provisions of Section 80 invoked and penalty under Section 76 set aside - Appeal is allowed by setting aside the penalty under Section 76 of the Finance Act.

Summary

Issues:
Short levy of service tax, imposition of penalties under Section 76, 77, and 78, excess service tax paid in certain years, invocation of Section 80 of the Act, challenge to penalties imposed by original authority and Commissioner (Appeals).

Analysis:

The judgment dealt with the appeal of a Government of India undertaking, SBI, regarding a show cause notice alleging short levy of service tax. The original authority confirmed the demand, along with interest and penalties under Sections 76, 77, and 78. The Commissioner (Appeals) modified the order, reducing penalties and confirming short payment only for a specific year. The appellant contended that excess service tax was paid in some years, and short payment was due to calculation errors in one year. The Commissioner (Appeals) found the short levy unsustainable for three out of four years and invoked Section 78 due to no intention to evade tax.

The appellant argued that excess service tax was paid in certain years, and the short payment was due to calculation mistakes in a specific year. The Commissioner (Appeals) agreed that short levy was only for one year, not three, and waived penalties under Section 78. The appellant sought waiver of the penalty under Section 76 invoking Section 80 of the Act, citing lack of intention to evade tax. The appellant referenced legal precedents to support their case.

The department opposed the waiver, arguing that penalties under Section 77 were sustained and not challenged by the appellants, indicating incorrect information provided. The department highlighted the upheld short levy for a specific year and the imposition of penalties under Sections 76 and 77. The department contended that mens rea was not necessary for imposing penalties under Section 76 and 77, as they complement each other.

The judge considered both sides' submissions and case records. The original authority found short levy for four years, but the Commissioner (Appeals) found excess payments in three years and short levy only in one year. The judge noted that the waiver of penalty under Section 78 was not challenged by the department, indicating no intention to evade tax. Acknowledging the excess payments made by the appellants, the judge invoked Section 80 to set aside the penalty under Section 76. The penalty under Section 77 was not addressed as there was no request to set it aside.

In conclusion, the appeal was allowed by setting aside the penalty sustained under Section 76 of the Finance Act.