2013 (10) TMI 93 - AT - Service Tax

Short payment of service tax - Penalty u/s 78 - Held that - applicant has paid 25% of the tax short paid as penalty adjudged by the original authority which is sufficient for waiver of pre-deposit of balance penalty for admission of appeal in the facts and circumstances of the case. So it is ordered accordingly. Further, there shall be stay on collection of such penalty arising from the pendency of the appeal - stay granted.

Summary

Issues:
Short payment of service tax, imposition of penalty under section 78, appeal against penalty imposed by Commissioner (Appeals), waiver and stay petition.

Analysis:
In this case, the applicant had a short payment of service tax, which was identified during an audit. Upon notification, the applicant paid the entire tax amount along with interest. Subsequently, a show cause notice was issued demanding tax, interest, and penalty. The adjudicating authority confirmed the demand and imposed a penalty of 25% of the tax under section 78. The Revenue filed an appeal arguing that the penalty should be equal to the tax as required by section 78. The Commissioner (Appeals) revised the penalty to be equal to the unpaid tax, prompting the applicant to file this appeal along with a stay petition for waiver and stay.

The applicant contended that the adjudication order did not strictly adhere to section 78 of the Finance Act 1994. They argued that the penalty imposed by the Commissioner (Appeals) should have allowed them to pay 25% of the short-paid tax, which had already been paid. The applicant sought admission of the appeal without any pre-deposit. On the other hand, the Revenue opposed this, stating that the original adjudication order did not comply with section 78 and that the penalty was not paid within the stipulated 30 days. The Revenue supported the legality and appropriateness of the Commissioner (Appeals) order.

After considering the arguments from both sides, it was observed that the applicant had already paid 25% of the tax as penalty, as determined by the original authority. This payment was deemed sufficient for the waiver of the pre-deposit of the remaining penalty for the admission of the appeal. As a result, the appeal was admitted without the need for further deposit, and there was a stay on the collection of the pending penalty during the appeal process.

This judgment highlights the importance of adherence to statutory provisions, specifically section 78 of the Finance Act 1994, in determining penalties for tax-related issues. It also underscores the significance of timely payments and the opportunity for parties to present their case effectively during the appeal process.