2013 (5) TMI 230 - AT - Service Tax

Penalty u/s 78 of the Act appellant collected the tax and have not deposited. appellant submits the he deposited the amount of duty, interest before issuance of SCN the non-payment of tax was due to wrong reconciliation of the amount received. Therefore the penalty cannot be imposed. Held that - The facts for imposition of penalty u/s 78 is narrated clearly in the SCN. Further, the adjudicating authority had clearly mentioned in the adjudication order that if the service tax determined is paid within thirty days from the date of communication of the order, then the amount of penalty liable to be paid shall be 25% of the service tax so determined. This option was not exercised by the appellant. - Levy of penalty confirmed.

Summary

Issues:
1. Alleged non-deposit of collected service tax into the Government's account.
2. Imposition of penalty under Sections 76 and 78 of the Finance Act, 1994.
3. Justification for penalty imposition based on suppression of facts and intention to evade tax payment.

Analysis:

1. The appellants were registered under various service categories and were alleged to have collected service tax but failed to deposit it into the Government's account. The audit party detected this non-payment, leading to the appellants depositing the tax amount along with interest before the issuance of a show-cause notice.

2. The show-cause notice proposed penalties under Sections 76 and 78 of the Act. The appellant's counsel argued that there was no intention to evade tax, attributing the non-payment to incorrect reconciliation of received amounts. The counsel contended that the penalty under Section 76 for failure to pay the correct tax amount could not be imposed under Section 78, as the latter pertained to suppressing the value of taxable services, which was not penalized in this case.

3. The AR argued that the case involved clear suppression of facts by the appellants, justifying the imposition of penalty under Section 78. The Tribunal, after considering both sides and reviewing the records, found merit in the AR's argument. The Tribunal noted that the appellants collected the tax but did not deposit it, supporting the imposition of penalty under Section 78 for retaining the tax amount.

4. The Tribunal upheld the adjudicating authority's decision to impose penalty under Section 78, emphasizing that the show-cause notice clearly outlined the grounds for penalty imposition. Additionally, the Tribunal highlighted that the appellants did not avail the option to reduce the penalty amount by paying the determined tax within the specified timeframe. Consequently, the Tribunal rejected the appeal, affirming the penalty under Section 78 and dismissing any interference with the Commissioner (Appeals) order.

In conclusion, the judgment affirmed the imposition of penalty under Section 78 of the Finance Act, 1994, based on the appellants' failure to deposit collected service tax, thereby upholding the authority's decision and dismissing the appeal.