2013 (2) TMI 359 - AT - Service Tax

Penalties u/s 76, 77 and 78 of Finance Act, 1994 - Non discharge of Service Tax liability on advance & commission received as mandap keepers - Held that - The appellant is a registered mandap keeper there could be a situation where the appellant could be under a bonafide belief as to not to discharge the Service Tax liability on the advance amount received, during the material period as the issue of Service Tax liability under the Mandap Keeper services also was in litigation finally settled by Hon ble Apex Court in the case of Tamilnadu Kalyana Mandapam Association (2004 (4) TMI 1 - SUPREME COURT OF INDIA). As the appellant had discharged the Service Tax liability on being pointed out & is not contesting the Service Tax liability and interest thereof the lower authorities should not have issued the show cause notice as provisions of Section 73 (3) may apply in this case. See Mangal Karyalaya Pvt.Ltd (2007 (4) TMI 40 - CESTAT, MUMBAI) - in favour of the appellant. This is fit case for invocation of provisions of Section 80 of Finance Act, 1994 for setting aside the penalties imposed on the appellant under Sections 76, 77 & 78 of Finance Act, 1994, as the appellant could be under a bonafide belief that they need not discharge the Service Tax on the amount of advance received by them - set aside the penalties imposed under Sections 76, 77 & 78 of Finance Act, 1994.

Summary

Issues involved:
Imposition of penalties under Section 76, 77, and 78 of Finance Act, 1994 on the appellant.

Analysis:

Issue 1: Imposition of Penalties under Section 76, 77, and 78 of Finance Act, 1994

The appellant was confused regarding the discharge of Service Tax liability on advances received during a specific period. They believed they were not required to pay tax on certain amounts until it was pointed out to them. The appellant eventually paid the entire Service Tax liability and interest but contested the penalties imposed by the lower authorities. The Tribunal considered the appellant's confusion as a reasonable cause and invoked Section 80 of the Finance Act, 1994 to set aside the penalties under Sections 76, 77, and 78. The Tribunal referred to similar cases where penalties were not imposed when a bonafide belief was present, supporting the appellant's position. The Tribunal found that the appellant had rectified the situation promptly upon being informed, indicating a lack of intent to evade taxes. Therefore, the penalties were deemed unjustified, and the appeal was allowed in favor of the appellant.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the Tribunal's decision regarding the imposition of penalties under the Finance Act, 1994.