2014 (2) TMI 290 - AT - Service Tax

Waiver of pre deposit - Penalty u/s 76 & 78 - Service tax liability discharged before the issuance of show cause notice - Held that - appellant herein had collected the service tax leviable on the services rendered by them from their clients but not deposited with the authorities. Appellant had deposited the amount, during the scrutiny of records admitting that they collected the same. At this juncture, we find that the appellant having not deposited the amount collected by them, needs to be put to some condition to hear and dispose the appeal - Conditional stay granted.

Summary

Issues:
Waiver of pre-deposit of penalties imposed for not discharging service tax liability.

Analysis:
The appellant filed a stay petition seeking waiver of pre-deposit of penalties imposed for not discharging service tax liability under Sections 76 & 78. The appellant's company secretary argued that the entire service tax liability was paid before the show cause notice was issued, requesting unconditional waiver. The Departmental Representative contended that the appellant collected service tax from clients but did not remit it to the government, even during an audit. The Tribunal noted that the appellant admitted to collecting service tax but not depositing it, requiring conditions for hearing the appeal. Despite paying the confirmed service tax dues, the Tribunal directed the appellant to pre-deposit Rs.10 lakhs within eight weeks and report compliance. The waiver of pre-deposit for the remaining balance was allowed, with recovery stayed until the appeal's disposal.

This judgment addresses the issue of waiver of pre-deposit of penalties for non-payment of service tax liability. The appellant's argument that the entire service tax liability was paid before the show cause notice was crucial. However, the Tribunal emphasized that even though the appellant admitted to collecting service tax, the failure to remit it necessitated imposing a pre-deposit condition. The Tribunal balanced this by acknowledging the payment of confirmed service tax dues and granting a partial waiver of pre-deposit, subject to compliance with the pre-deposit amount and reporting requirements.

In conclusion, the Tribunal's decision highlights the importance of timely payment and remittance of service tax liabilities. While acknowledging the appellant's payment of confirmed dues, the Tribunal imposed a pre-deposit condition due to the failure to remit collected service tax. By allowing a partial waiver of pre-deposit for the remaining balance, subject to compliance, the Tribunal ensured a fair balance between the appellant's interests and the need for compliance with tax obligations.