2012 (8) TMI 716 - HC - Service Tax

Penalty - delay in payment of service tax - service tax and the interest have been deposited belatedly but the penalty amount was not deposited Held that - No intention to avoid payment of service tax and infact for the period from September, 2004 February 2005 the service tax has been deduct and further in view of the information given by the NIIT of which the respondent is a franchise claiming that they have made out a ground claiming exemption the said explanation has been accepted by the appellate authority - ground is made out for waiving of the penalty 80 of the Act is justified - appeal is dismissed.

Summary

Issues:
1. Appeal against order passed by Customs, Excise and Service Tax Appellate Tribunal.
2. Imposition of penalty for non-payment of Service Tax.
3. Validity of waiver of penalty under Section 80 of the Finance Act, 1994.
4. Interpretation of Sections 76 and 78 of the Finance Act.

Analysis:
1. The appeal was filed by the Revenue challenging the order passed by the Customs, Excise and Service Tax Appellate Tribunal, which set aside the penalty imposed by the Assistant Commissioner of Service Tax. The respondent had collected Service Tax but failed to remit it to the Government, leading to a demand notice. The Assistant Commissioner imposed a penalty, which was later waived by the appellate authority under Section 80 of the Finance Act. The Tribunal upheld the waiver, prompting the Revenue to file this appeal.

2. The key issue was the imposition of penalty for non-payment of Service Tax. The respondent collected the tax but delayed remittance, citing instructions from a franchise and pending clarifications. The Assistant Commissioner imposed a penalty under Sections 76 and 78 of the Finance Act. However, the appellate authority waived the penalty, considering the explanation provided and the deposit of tax and interest. The Tribunal upheld this decision, emphasizing the absence of intent to evade tax payment.

3. The crux of the matter revolved around the validity of waiving the penalty under Section 80 of the Finance Act. The appellate authority and the Tribunal accepted the respondent's explanation, leading to the waiver of the penalty. The court examined the reasoning behind the waiver, emphasizing that the penalty under Section 76 can be waived under Section 80 if a reasonable cause is established. The court upheld the concurrent findings of fact by the appellate authority and the Tribunal, deeming the waiver justified and not arbitrary.

4. The interpretation of Sections 76 and 78 of the Finance Act was crucial in determining the outcome of the case. The court analyzed the provisions and their applicability to the present situation where the penalty was imposed but later waived. The court concluded that the waiver under Section 80 was valid, considering the circumstances and explanations provided by the respondent. Ultimately, the court dismissed the appeal, holding that the waiver of penalty was justified and the appeal lacked merit.