2013 (10) TMI 95 - HC - Service Tax

Waiver of Penalty u/s 80 - Whether ignorance of law can be a reasonable cause for allowing benefit of waiving penalties under Section 80 of the Finance Act, 1994 Held that - The ignorance of law is of no excuse - The Revenue in the appeal contended that ignorance of law is of no excuse - However, it is not disputed by the Revenue that there was no mala fide intention in depositing the tax in time by the respondent - both the respondents are individual owners of vehicles and providing the vehicles to M/s. BSNL Ltd., a Public Sector undertaking and IFFCO under the contract - no substantial question of law arises for decision Appeal Dismissed.

Summary

Issues:
Challenge to Central Excise Appeal under Section 35G of the Central Excise Act, 1944 regarding service tax demand and penalty imposition. Ignorance of law as a reasonable cause for waiving penalties under Section 80 of the Finance Act, 1994.

Analysis:
The appeal before the Allahabad High Court involved a challenge to an order passed by the Customs, Excise & Service Tax Appellate Tribunal confirming the demand of service tax and penalty imposition on an individual cab owner providing services to public sector undertakings. The issue revolved around whether ignorance of the law could be considered a reasonable cause for waiving penalties under Section 80 of the Finance Act, 1994. The Tribunal considered the Revenue's contention that ignorance of the law is not an excuse but found that there was no mala fide intention in the non-timely deposit of tax by the respondent. The Tribunal noted that the respondents were individual owners of vehicles providing services under contract to public sector undertakings, making the case laws cited by the Revenue inapplicable.

The Tribunal upheld the order of the Commissioner (Appeals) based on the finding that there was no mala fide intention in the tax deposit delay. Consequently, the High Court found no substantial question of law arising for decision in the appeal and dismissed the appeal, concluding the matter on the basis of the factual finding. The judgment emphasized that ignorance of the law, in this case, was not deemed a reasonable cause for waiving penalties under the Finance Act, 1994, but the absence of mala fide intention in the tax deposit delay was a crucial factor in the decision-making process.