2006 (12) TMI 68 - AT - Service Tax

Penalty on Chartered Accountant for late deposit of Service Tax no appeal was filed against the penalty imposed by the original authority. Commissioner enhanced the penalty in a revision but he did not appear before commissioner. No appeal is maintainable against the order of commissioner.

Summary

Issues:
Enhancement of penalty under Section 76 of the Finance Act, 1994 by the Commissioner as a revising authority.

Analysis:
The case involves the appellant, a Chartered Accountant, who delayed the payment of Service tax for two quarters. The adjudicating authority imposed a penalty of Rs. 500 under Section 76 of the Finance Act, 1994, which the appellant did not appeal. The Commissioner, as a revisionary authority, issued a show cause notice to review the penalty. The appellant argued that being new to the Service Tax Act, he was unaware of his responsibilities. The appellant cited legal precedents to support his contention that penalties should not be imposed without deliberate defiance of the law. The Commissioner, after examining the evidence, concluded that the penalty should be enhanced as per Section 76. The appellant did not challenge the original penalty order, indicating acceptance of the penalty under Section 76.

In a significant development, the Larger Bench of the Tribunal in the case of ETA Engineering Ltd. v. CCE, Chennai clarified the interpretation of Section 76. The Tribunal noted conflicting opinions on the minimum penalty amount for each day of delay. However, the Tribunal's interpretation of Section 76 clarified that the penalty should be not less than Rs. 100 per day but could extend to Rs. 200 for each day of non-compliance. This interpretation was based on the absence of a comma after "one hundred rupees" in the provision.

In light of the legal interpretation provided by the Larger Bench, the Commissioner upheld the penalty on the appellant as per Section 76. The Commissioner noted that the appellant's failure to challenge the original penalty order indicated acceptance of the penalty under Section 76. Consequently, the appeal filed by the appellant was dismissed based on the facts and circumstances of the case.

In conclusion, the judgment highlights the importance of timely compliance with tax obligations and the legal consequences of non-compliance. The case underscores the significance of understanding and adhering to statutory provisions to avoid penalties and legal repercussions. The interpretation of Section 76 by the Tribunal provides clarity on the minimum penalty amount for failure to pay service tax on time, emphasizing the need for strict adherence to tax laws and regulations.