2014 (7) TMI 36 - AT - Service Tax

Penalty u/s 77 - Waiver of penalty u/s 80 - Business Auxiliary Service - Whether penalties imposed upon the appellant could be waived as per provisions of Section 80 of the Finance Act 1994 - Held that - Audit officers of the Dept. gave intimation dated 6/5/2009 to the appellant and called for certain information. Even after follow up by the Dept Officers, appellant did not provide the relevant details for almost one month. The case was subsequently taken over by the HQ (Preventive) and several summons were also issued to the appellant for submitting complete details of the Business Auxiliary Service provided to M/s Ratnamani Metals and Tubes Ltd during the year 2008-09. Only on receipt of such letter, the appellant started discharging their service tax liabilities under Business Auxiliary Service in the month of July 2010 through GAR-7 challans. It is also evident from the facts stated in Para 12 of the OIO dated 27/3/2012 that service tax for the Business Auxiliary Service provided to M/s Ratnamani Metals and Tubes Ltd were recovered in the invoices and appellant was aware of that fact. However, while filing ST-3 returns for the relevant period, service tax payment for these services was shown as Nil by the appellant. From the available case records and the arguments made by the appellant, no reasonable cause has been shown by the appellant to bring out as to what prevented them from making payment of service tax when the same has been recovered from the service recipient in the invoices. Therefore, in the present set of facts and circumstances, it is held that the benefit of Section 80 of the Finance Act 1994 cannot be extended to the appellant - Decided against assessee.

Summary

Issues Involved: Appeal against confirmed duty liability for Business Auxiliary Service and imposition of penalties under various sections of the Finance Act 1994, dispute over the applicability of penalties under Section 80 of the Finance Act 1994.

Analysis:

1. Duty Liability for Business Auxiliary Service:
The appellant did not dispute the duty liability for Business Auxiliary Service provided but contested the penalties imposed. The adjudicating authority confirmed an amount of Rs 10,14,937/- along with interest, and penalties under different sections of the Finance Act 1994. The appellant argued that the service provided was a minor commercial activity, payments were received through cheques, and any short payment was rectified promptly upon discovery.

2. Applicability of Penalties under Section 80 of the Finance Act 1994:
The main issue in this appeal was whether the penalties imposed on the appellant could be waived under Section 80 of the Finance Act 1994. The appellant's representative contended that there was a reasonable cause for the delayed payment of service tax and penalties should be waived. On the other hand, the Revenue representative argued that the appellant collected service tax from recipients but failed to pay it to the Revenue, which was only noticed upon detection by Departmental Officers.

3. Court's Decision:
After hearing arguments from both sides and examining the case records, the court found that the appellant did not provide a reasonable cause for the delayed payment of service tax. The court noted that despite being aware of the service tax liability, the appellant had shown Nil payment in the relevant returns. The court held that the appellant failed to demonstrate what prevented them from making timely payments when the tax was collected from recipients. Consequently, the court rejected the appeal and upheld the penalties imposed by the lower authorities.

In conclusion, the court's decision emphasized the importance of timely and accurate payment of service tax liabilities, highlighting that the benefit of Section 80 of the Finance Act 1994 could not be extended to the appellant in this case due to the lack of a reasonable cause for the delayed payments.