2013 (5) TMI 229 - AT - Service Tax

EA-2000 audit of the appellant - appellant had failed to pay service tax within stipulated time Recovery of interest/penalty Held that - The order of the lower authorities confirming the amount of recovery of the interest seems to be correct as per the provisions of Finance Act, 1994. Waiver of penalty - held that - appellant had given a reasonable cause due to slow down in the realty sector during the material period they were unable to pay the amount of service tax liability in time. - appellant has made out a case for invocation of Section 80 of the Finance Act, 1994. - penalty waived.

Summary

Issues:
1. Delay in payment of service tax by the appellant.
2. Recovery of interest and penalty imposed under Section 76.
3. Invocation of Section 80 of the Finance Act, 1994.

Analysis:
1. The appellant, engaged in commercial and industrial construction services, failed to pay service tax within the stipulated time, leading to a delay in payment spread over the period from 2005 to 2008. A show cause notice was issued, resulting in an order for recovery of interest and imposition of a penalty under Section 76.

2. The appellant appealed the order before the first appellate authority, which upheld the decision of the adjudicating authority. Upon hearing both sides and reviewing the records, it was noted that the appellant had filed service tax returns for the relevant period but had not fully discharged the service tax liability. The lower authorities' decision on the recovery of interest was deemed correct as per the provisions of the Finance Act, 1994. However, considering the appellant's reasonable cause due to a slowdown in the realty sector during the material period, the penalty imposed under Section 76 was set aside by invoking Section 80 of the Finance Act, 1994.

3. The appellate tribunal rejected the appeal concerning the recovery of interest but allowed the appeal regarding the penalty under Section 76. The decision was made based on the appellant's reasonable cause for the delay in paying the service tax liability within the stipulated time frame. The invocation of Section 80 led to the setting aside of the penalties imposed by the lower authorities, ultimately resulting in the appeal being allowed.

This detailed analysis covers the issues of delay in payment of service tax, recovery of interest and penalty under Section 76, and the invocation of Section 80 of the Finance Act, 1994, as addressed in the judgment by the Appellate Tribunal CESTAT AHMEDABAD.