2013 (10) TMI 204 - AT - Service Tax

Penalty u/s 76 and 78 - Waiver of penalty u/s 80 - service tax on GTA under reverse charge method was adjusted with cenvat credit - later paid in case at the instance of revenue - Held that - There cannot be any intention on the part of the appellant to evade service tax payment once the amount has been debited from the RG-23 account maintained by the appellant. On being pointed out appellant paid the entire disputed amount through TR-6 challan appellant has, therefore, had a reasonable cause for not making payment in cash when they were discharging the service tax liability on GTA services by debiting the service tax amount from their RG-23 account. It is therefore a fit case were penalties u/s. 76 and 78 are not imposable by virtue of section 80 of the Finance Act, 1994. Accordingly penalties imposed u/s. 76 and 78 of the Finance Act by the lower authorities are set aside under in section 80 of the Finance Act, and appeals filed by the appellant are allowed - Decided in favour of assessee.

Summary

Issues:
1. Imposition of penalties under sections 76 and 78 of the Finance Act, 1994.
2. Applicability of section 80 of the Finance Act, 1994 in relation to penalties.

Analysis:
1. The appellant filed appeals against two orders-in-original passed by the Adjudicating authority for the same period. The first order-in-original did not impose a penalty under section 76 as a penalty under section 78 was already imposed. The revenue filed an appeal against the non-imposition of penalty under section 76. Subsequently, another order-in-original was passed imposing a penalty under section 76. The appellant appealed against this second order as well. The appellant argued that penalties under sections 76 and 78 are not imposable due to the provisions of section 80 of the Finance Act, 1994. The appellant cited relevant case laws to support their argument.

2. During the proceedings, the appellant did not appear on the scheduled date but submitted arguments through their advocate. The advocate highlighted that simultaneous penalties under sections 76 and 78 are not imposable, referencing specific case laws. On the other hand, the revenue argued that the penalties were rightly invoked, citing various case laws to support their stance. The Tribunal considered the arguments presented by both parties and examined the case records.

3. The Tribunal observed that the appellant was registered for GTA services and was paying service tax by adjusting their cenvat credit account. The appellant paid the disputed service tax amount before the issuance of the show-cause notice. The appellant's director stated that they were paying GTA services by adjusting their cenvat credit account and not filing separate returns. The issue of payment under reverse charge was under litigation. Considering the facts and the appellant's actions, the Tribunal found that there was no intention to evade service tax payment. The appellant had a reasonable cause for not making cash payment as they were already debiting the service tax amount from their RG-23 account. Therefore, the Tribunal held that penalties under sections 76 and 78 were not imposable under section 80 of the Finance Act, 1994. Consequently, the penalties imposed by the lower authorities were set aside, and the appeals filed by the appellant were allowed.

In conclusion, the Tribunal's judgment favored the appellant, ruling that penalties under sections 76 and 78 were not applicable in this case due to the provisions of section 80 of the Finance Act, 1994. The decision highlighted the appellant's genuine payment efforts and the absence of intent to evade tax obligations, leading to the setting aside of the penalties imposed by the lower authorities.