2006 (11) TMI 95 - AT - Service Tax

Appellant had failed to deposit the tax within stipulated period. Earlier they were meeting the liability correctly but later on they did not comply with the provisions. Now they can not claim ignorance. Penalty can not be waived on the ground of financial difficulties.

Summary

Issues:
- Upholding penalties imposed on the appellants for delayed payment of Service tax and failure to file returns.
- Contesting penalties under Sections 76 and 77 of the Finance Act, 1994.
- Lack of leniency in penalty imposition despite payment of total Service tax before the show cause notice.
- Failure to deposit tax within stipulated period from October 2001 to March 2003.
- Appellant's inability to show reasonable cause for non-payment and non-filing of returns.

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi challenged the penalties imposed on the appellants for delayed payment of Service tax and failure to file returns. The appellants, engaged in providing security services, delayed the payment of Service tax for the period October 2001 to March 2003 and did not file returns during this time. The authorities issued a show cause notice confirming the Service tax demand and imposing penalties under Sections 76 and 77 of the Finance Act, 1994, along with interest under Section 75. The appellant contended financial difficulties as the reason for the delay but did not contest the penalty under Section 77, only disputing the penalty under Section 76. The appellant argued for leniency in penalty imposition due to having paid the entire Service tax amount before the show cause notice was issued.

The Tribunal considered the submissions and examined the record. It noted that the appellant failed to deposit the tax within the stipulated period despite being registered and compliant in previous years. The Tribunal concurred with the Commissioner (Appeals) that the appellant did not provide any reasonable cause for the non-payment and non-filing of returns from October 2001 to March 2003. Consequently, the Tribunal found no grounds to interfere with the Commissioner (Appeals)'s order and dismissed the appeal, stating it lacked merit.

In conclusion, the Tribunal upheld the penalties imposed on the appellants for the delayed payment of Service tax and failure to file returns, emphasizing the appellant's failure to show a reasonable cause for non-compliance during the relevant period. The judgment highlighted the importance of adhering to tax payment and return filing obligations, even in the face of financial difficulties, and affirmed the decision of the lower authorities regarding penalty imposition under Sections 76 and 77 of the Finance Act, 1994.