2013 (11) TMI 763 - AT - Service Tax

Penalties under Sec. 76 & 78 - Assessee failed to file regular returns from 01/04/2000 to 31/03/2004 and also did not deposit the service tax payable - But entire Service Tax, along with interest, was paid by the assessee before issue of show-cause-notice - Applicability of amnesty scheme introduced by CBEC as per Chennai Commisonarate-III Trade Notice No. 18/2004-ST dt. 23/09/2004 - Held that - A plain reading of the above scheme reveals that the same is applicable to those service providers who were not registered and who filed a prescribed registration upto 30.10.2004. However, such non registered unit, whether due to ignorance or for any other reasons, were entitled to a complete waiver of penalties. In the case of the appellant the period involved is also prior to 30/10/2004. However, no declaration has been filed by the appellant before 30/10/2004 as required under the Extraordinary taxpayer friendly scheme (ETFS). Secondly ETFS scheme was initiated by the Central Govt, only for those units which were not registered and not for those units which were already registered and filing returns. There was a delay in payment of service tax liability and statutory provision exist to the effect that service tax due can be paid by an assessee belatedly along with payment of interest as prescribed. The same has been paid by the appellant and thus it cannot be a case of suppression with intention to evade service tax on the part of the appellant. Revenue was also not barred from taking any recovery action when periodical returns were not being filed by the appellants. In view of the above penalty under Sec. 78 of the Finance Act, 1944 is not attracted upon the appellant and is set aside. Appellant did not file the prescribed returns as required under the Service Tax law therefore, penalty under Sec. 76 has been rightly imposed upon the appellant and is upheld - Decided partly in favour of assessee.

Summary

Issues:
Non-imposition of penalties under Sec. 76 & 78 of the Finance Act, 1994.

Analysis:
The appellant, a service provider registered since January 1997, failed to file regular returns and pay service tax from 01/04/2000 to 31/03/2004. After paying the entire service tax and interest before receiving a show-cause notice, the appellant appealed against penalties under Sec. 76 & 78 of the Finance Act, 1994.

Appellant's Argument:
The appellant cited a Chennai Trade Notice and a Delhi High Court case to support their claim for amnesty from penalties. They argued that penalties exceeding 25% of the duty amount cannot be imposed since they paid the tax and interest before the notice. The appellant contended that the extended period should not apply as there was no intention to evade duty.

Revenue's Argument:
The Revenue opposed the appellant's claim for amnesty, stating that the Extraordinary Taxpayer friendly Scheme (ETFS) did not apply as the appellant was aware of their tax liability. They argued that penalties were correctly imposed due to the appellant's failure to file returns and withholding material information.

Court's Analysis:
The court examined the Chennai Trade Notice and found it applicable to non-registered units seeking registration by a specified date, not to already registered units like the appellant. Regarding penalty under Sec. 78, the court ruled that since the appellant paid the tax and interest belatedly, there was no intention to evade duty, thus setting aside the penalty. However, the court upheld the penalty under Sec. 76 for non-filing of statutory returns.

Conclusion:
The court allowed the appeal only to the extent that penalty under Sec. 78 of the Finance Act, 1994 was not applicable in this case. The judgment was pronounced on 14.08.13 by Mr. H.K. Thakur.