2014 (6) TMI 866 - HC - Service Tax

Penalty u/s 76 & 78 - Failure to remit tax - penalty u/s 76 and 78 simultaneously imposed - petitioner contends that, the amendment brought by introduction, of the Proviso, on 10.05.2008, has not been brought to the notice of the learned single Judge. - Adjustment in penalty imposed with already deposited - Held that - it is seen that the assessing authority has taken into account the amendment, brought in. In page 4, paragraph 4, the penalty imposed under Section 76 is only till 10.05.2008; ie., till the date of amendment and the introduction of the proviso which bars imposition of penalty under Section 76 of the Act if penalty under Section 78 of the Act is imposed. In such circumstance, the contentions raised by the petitioner regarding the illegality in the levy of penalty cannot be sustained. - Decided against the assessee. Adjustment of penalty already paid - Held that - the amounts already paid have also been taken into account. Ext.P5 is an order issued, pursuant to the directions of this Court directing credit to be given to all payments effected by the petitioner. - credit of penalty already deposited to be given - decided in favor of assessee. Adjustment of penalty levied i.e. to be reduced to the extent amount of service tax has been deposited earlier - Held that - Such amounts cannot be adjusted, since, penalty under Section 78 of the Act has to be on the defaulted amounts subject to a maximum of double the actual amounts due. The petitioner having failed to remit any amounts as tax in the relevant years, no adjustments can be made in the penalty levied, on the basis of amounts paid subsequent to the relevant years. Pray to keep the recovery proceedings in abeyance till the additional 4th respondent pays the amounts to the petitioner - Held that - no direction can be issued to keep in abeyance the demand of tax assessed and penalty levied, on that ground, under Article 226 of the Constitution of India. However, considering the fervent plea made by the learned counsel for the petitioner, the petitioner shall be permitted to pay the amounts due in instalments. - entire amount allowed to be deposited in five installments - Decided partly in favour of assessee.

Summary

Issues:
1. Service tax liability imposed on the petitioner
2. Penalty under Sections 76 and 78 of the Act
3. Computation and amounts due from the additional respondent
4. Imposition of penalty on amounts deposited by the petitioner
5. Contention regarding amounts payable by the additional respondent

Analysis:

1. The petitioner was aggrieved by the service tax liability imposed and the penalty under Sections 76 and 78 of the Act. The petitioner argued that they were unable to file an appeal within the specified time and that their turnover was below the limit prescribed by the Act in the relevant years. The petitioner also challenged the penalty imposed, citing a Proviso introduced to Section 78 of the Act in 2008. The Court noted that similar contentions were raised in a previous proceeding before the same Court.

2. The Court found that penalties under Sections 76 and 78 of the Act were permissible based on previous judgments. It emphasized that failure to file an appeal within the specified period precludes invoking Article 226 of the Constitution to bypass statutory requirements. The Court also addressed the impact of the Proviso introduced in 2008, stating that the assessing authority had considered this amendment in the penalty imposed.

3. Regarding computation and amounts due, the petitioner contended that payments made were not properly adjusted. However, the Court examined the orders issued, confirming that credit was given for payments made. The Court upheld the computation of amounts due and observed that credit had been appropriately applied.

4. The imposition of penalties on amounts deposited by the petitioner was challenged. The Court noted that penalties were imposed for past assessments, and subsequent payments could not be adjusted against these penalties. The petitioner's failure to remit taxes in the relevant years meant that penalties could not be reduced based on payments made later.

5. The petitioner raised an alternate contention regarding amounts payable by an additional respondent. The Court ruled that the petitioner must pursue recovery from the additional respondent through the appropriate forum and that the service tax liability could not be deferred based on this contention. However, the Court allowed the petitioner to pay the outstanding amounts in installments, starting from a specified date, with future interest payable accordingly.

In conclusion, the Court dismissed the petitioner's contentions against the orders in question but permitted installment payments for the amounts due, with instructions for future interest payments.