2013 (12) TMI 1431 - AT - Service Tax

Penalty u/s 78 - Waiver of penalty u/s 80 - Repeated failure to discharge service tax liability - Appellant also failed to submit statutory ST-3 returns from April 2008 onwards - Held that - appellant had collected service tax from the customers but failed to remit the same to the exchequer. The failure on the part of the appellant to discharge the tax liability has taken place several times during the impugned period. Every time the department pointed out the mistake, the appellant used to make good the short-payment in service tax along with interest. It is also a fact that the appellant did not file ST-3 returns within the statutory period prescribed. The argument of financial difficulty raised by the appellant is bereft of any logic. If service tax amount has been collected from the customer, the appellant cannot plead financial difficulty in remitting the same to the exchequer. The argument that the appellant is only a matriculate is also not sufficient reason for non-compliance with the statutory provisions. From the records of the case, it is evident that the appellant was aware of the legal procedures and requirement. The appellant collected the service tax from the customers but failed to remit the same to the exchequer - Therefore, penalty is justified - Decided against assessee.

Summary

Issues:
Failure to discharge service tax liability, non-filing of statutory ST-3 returns, imposition of penalties under Section 70 and Section 78 of the Finance Act, 1994, appeal against penalty under Section 78.

Detailed Analysis:
The appellant, engaged in 'Manpower Recruitment and Supply Agency Services,' failed to pay service tax for the period July 2009 to December 2009 despite collecting service tax from customers. Additionally, the appellant did not submit statutory ST-3 returns from April 2008 onwards. A show cause notice was issued, demanding recovery of service tax, interest, and penalties. The jurisdictional Additional Commissioner confirmed the demand, ordered recovery of balance interest, and imposed penalties under Section 70 and Section 78 of the Finance Act, 1994. The appellant appealed contesting only the penalty under Section 78.

The appellant argued that being a matriculate with dependent parents, he faced difficulties in discharging the tax liability promptly. However, the Revenue contended that the appellant's conduct did not warrant penalty waiver as he repeatedly failed to comply with statutory requirements despite collecting service tax from customers and availing CENVAT credit. The Revenue emphasized the appellant's recurring failures and lack of reasonable cause for non-compliance.

Upon review, the Tribunal noted the appellant's consistent failure to remit collected service tax and non-filing of ST-3 returns within the prescribed period. The Tribunal rejected the appellant's financial difficulty argument, stating that collecting service tax from customers precluded such excuses. The Tribunal found the appellant's matriculation status insufficient to justify non-compliance with legal obligations. It concluded that the appellant knowingly disregarded statutory requirements despite being aware of them, justifying the penalty under Section 78. Consequently, the Tribunal upheld the lower appellate authority's decision, dismissing the appeal for lack of merit.

In summary, the Tribunal upheld the imposition of penalties under Section 78 of the Finance Act, 1994, citing the appellant's repeated failures to comply with service tax laws despite collecting taxes from customers, leading to the dismissal of the appeal.