2013 (9) TMI 665 - AT - Service Tax

Waiver of penalty - Short Payment of Duty Delayed Payment of Duty - Business Auxiliary Services and Goods Transport Agencies Penalty u/s 78 - Revenue noticed that the assesse had not discharged their service tax liability on Business Auxiliary Service during Dec 06 to Mar 07 and on services of Goods Transport Agency during the period Jan 05 to Mar 07 Penalty imposed u/s 78 was challenged by the assesse - Held that - There was no justifiable reason for invoking provisions of section 80 of Finance Act, 1994 thus the penalty imposed u/s 76 could not be waived relying upon COMMISSIONER OF SERVICE TAX, BANGALORE Versus GOWRI COMPUTERS (P) LTD. 2011 (9) TMI 808 - CESTAT, BANGALORE . Contention of the assesse that they should be extended benefit of either section 73(1A) or section 73 (3) could not be accepted - There was element of suppression involved and the benefit of section 73(1A) could have been given only if 25% of duty was paid as penalty - Secondly section 73 (3) deals with recovery of tax not paid - Section 76 deals with penalty for delay in payment of tax - it was not possible to interpret these provisions to meant that an assessee can collect and keep the tax with him and deposit when it comes to the notice of the department and no penal consequence will follow other than interest - the defaults continued even for periods after the point of time the issue was pointed out by audit Decided against assesse.

Summary

Issues:
- Short payment of service tax under Business Auxiliary Services
- Delayed payment of service tax on Goods Transport Agency services
- Show Cause Notice for recovery of short-paid service tax
- Demand for interest and penalty under Finance Act 1994
- Appeal challenging penalty imposition

Short Payment of Service Tax under Business Auxiliary Services:
The appellants provided Business Auxiliary Services, including washing bottles for M/s. Balaji Breweries. During an audit, it was found that they had not paid service tax amounting to Rs. 57,86,460/- for Dec'06 to Mar'07 and Rs. 3,52,531/- for services of Goods Transport Agency from Jan'05 to Mar'07. Additionally, a shortfall of Rs. 4,766/- in tax was noted for the quarter ending Jun'07. A Show Cause Notice was issued, demanding recovery of the short-paid amount along with interest and penalty under section 76 of the Finance Act 1994.

Delayed Payment of Service Tax on Goods Transport Agency Services:
Further scrutiny revealed that the appellants had paid service tax liabilities of Rs. 87,19,862/- after the due dates for payments. This delayed payment led to the imposition of interest under Section 75 of the Act. The appellants contested the penalty imposed, arguing that the delays were not intentional but due to cash flow issues arising from delayed payments from M/s. Balaji Breweries.

Show Cause Notice for Recovery of Short-Paid Service Tax:
The Show Cause Notice demanded the short-paid service tax amount along with interest under section 75 of the Act. The adjudication resulted in the order to recover the outstanding amounts, appropriate the payments made, and impose a penalty under Section 76 of the Finance Act 1994.

Demand for Interest and Penalty under Finance Act 1994:
The order demanded the short-paid service tax amount, interest, and imposed a substantial penalty on the appellants for contravention of tax payment provisions. The appellants challenged the penalty imposition, citing reasons for the delays in payment and arguing against the applicability of certain sections of the Act.

Appeal Challenging Penalty Imposition:
The appellants appealed against the penalty imposed, contending that the delays were not intentional attempts to evade duty but were due to financial constraints caused by delayed payments from their clients. They relied on legal instructions and precedents to support their argument for leniency and waiver of penalty under section 80 of the Finance Act 1994. However, the Revenue argued that the penalties were justified due to the appellants' repeated defaults in tax payments even after the audit revelations.

This judgment addresses issues related to short payment and delayed payment of service tax, leading to the issuance of a Show Cause Notice, demand for interest, and penalty imposition under the Finance Act 1994. The appellants' arguments centered around the reasons for the payment delays, seeking leniency and waiver of penalties. However, the adjudication upheld the penalty imposition, emphasizing the lack of justifiable reasons for waiving penalties based on the facts of the case and the continued defaults in tax payments post-audit. Ultimately, the appeal challenging the penalty imposition was rejected, affirming the penalties imposed on the appellants for the contraventions identified during the audit.