2012 (10) TMI 373 - AT - Service Tax

Short payment of service tax - Goods Transport Agency Service - penalties u/s 77 and 78 - Held that - It is true that the appellant has short-paid the service tax on inward transportation but on pointing out by the Department, had immediately paid the service tax which was available to them as credit and not disputed the payment of service tax. Thus the benefit of Section 80 be given to the appellants by waiving the penalties imposed.- in favour of assessee.

Summary

Issues: Appeal against penalties under the Finance Act, 1994 for short-payment of service tax on inward transportation services.

Analysis:
1. Issue of Short-Payment of Service Tax: The appellants, manufacturers of excisable goods, had short-paid a sum under the category of Goods Transport Agency Service during 2008-09 and 2009-10. Upon detection by the Department, the appellants promptly paid the service tax. The show-cause notice was issued for invoking penalties under Sections 77 and 78 of the Finance Act, 1994.

2. Contentions and Legal Provisions: The appellant argued that the short-payment was a bonafide mistake and that they had paid the service tax immediately upon detection, which was available to them as credit. They relied on Section 73(3) and Section 80 of the Finance Act, stating that penalties should not be imposed under bonafide belief or in cases of bonafide mistakes. The Department, however, opposed this argument, emphasizing that revenue neutrality is not a ground for waiving penalties and cited relevant Supreme Court decisions to support their stance.

3. Judicial Analysis and Decision: The Tribunal, after hearing both sides, distinguished the central excise matters cited by the Department from the service tax issue at hand. The Tribunal noted that under the Finance Act, provisions like Section 73(3) and Section 80 empower the adjudicating authority to waive penalties if the assessee proves bonafide mistakes. In this case, since the appellants promptly paid the service tax upon detection and did not contest the liability, the Tribunal granted the benefit of Section 80 to the appellants. Consequently, the penalties imposed under the Finance Act were waived, modifying the impugned order accordingly.

4. Conclusion: The appeal was disposed of with the modification that the penalties under the Finance Act imposed on the appellants were waived. The judgment highlighted the importance of proving bonafide mistakes and prompt payment of taxes in seeking relief from penalties under the relevant provisions of the Finance Act, 1994.