2013 (12) TMI 489 - AT - Service Tax

Penalty u/s 76 - Delay in filing return - Original authority considered that penalty is not imposable under Section 76 - Revisional authority imposed penalty under Section 76 for 6 days delay - Held that - The adjudication nowhere throws light about analysis of Section 80 to the case of the appellant. The only consideration before the adjudicating authority was that there was 6 days delay and the appellant had no mala fide. No doubt, in his testing under Section 80 of Finance Act, 1994 pleading of appellant was agreed. The order recorded by revisional authority does not show such pleading. But the delay was only 6 days in filing return as is recorded by the adjudicating authority. The pleading of the appellant was that there were financial crisis and period of dispute was prior to extraordinary tax friendly scheme. When the matter was not decided by the adjudicating authority specifically invoking Section 80, the revisional authority lacks scope to proceed in a new premise. The reasons recorded by the adjudicating authority read with plea of the appellant demonstrates mitigating factor for waiver of penalty. The revisional order rather appears to be unreasonable and becomes unsustainable for a small taxpayer at the initial stage of levy - Decided in favour of assessee.

Summary

Issues:
1. Imposition of penalty under Section 76 of the Finance Act, 1994 for delay in payment of service tax.
2. Analysis of Section 80 of the Finance Act, 1994 and its applicability in the case.
3. Consideration of mitigating factors for waiver of penalty.

Analysis:
1. The appellant sought relief from penalty under Section 76 of the Finance Act, 1994, arguing that there was no mala fide intention as taxes and interest were deposited within a short period after the due date. The original adjudication acknowledged the absence of mala fide and did not impose a penalty. However, the revisional authority imposed a penalty for a 6-day delay in filing the return, amounting to Rs. 60,846. The revisional authority did not consider the appellant's plea of financial crisis and the period being prior to a tax-friendly scheme. The appellate tribunal found the revisional order unreasonable and unsustainable for a small taxpayer, emphasizing the mitigating factors presented by the appellant.

2. The revisional authority analyzed the provisions of Section 80 of the Finance Act, 1994, and concluded that it was not applicable in the case. The adjudication did not address Section 80, focusing only on the delay in filing the return and the absence of mala fide. The appellant's plea regarding financial difficulties and the context of the tax-friendly scheme was not considered by the revisional authority. The tribunal held that since the adjudicating authority did not specifically invoke Section 80, the revisional authority lacked the grounds to introduce a new premise for penalty imposition.

3. The tribunal considered the mitigating factors presented by the appellant, such as financial crisis and the period of dispute being before a tax-friendly scheme. The adjudicating authority did not delve into Section 80 but acknowledged the appellant's plea. The tribunal found that the revisional order failed to take into account these factors and proceeded unreasonably in imposing a penalty. Consequently, the tribunal allowed the appeal, dispensing with the requirement of pre-deposit, considering the circumstances of the case and the mitigating factors presented by the appellant.