2014 (7) TMI 327 - AT - Service Tax

Waiver of penalty u/s 80 - Penalty u/s 76, 77 & 78 - GTA services - Commissioner waived penalty u/s 76 but sustained penalty u/s 77 & 78 - Held that - Penalties under Sections 77 & 78 also can be waived by invoking the provisions of Section 80 of Finance Act in view of the fact that if the appellants were to pay service tax promptly, they would have got the CENVAT credit benefit and therefore the situation is entirely revenue-neutral. Under these circumstances, it cannot be said that appellants had caused evasion of the tax. Apparently the claim of the appellant that it was a mistake appears to be correct - Decided in favour of assessee.

Summary

Issues involved: Liability of the appellant to pay service tax on GTA services received from January 2005 to August 2006; challenge against the levy of penalty under Sections 76, 77, and 78 of the Finance Act 1994.

Analysis:

1. Liability of the Appellant to Pay Service Tax on GTA Services:
The appellant was under scrutiny for the payment of service tax on GTA services received during a specific period. The appellants had paid the entire service tax amount before the issuance of the show-cause notice, focusing their challenge solely on the penalty imposed. The Commissioner (Appeals) had dropped the penalty under Section 76 of the Finance Act 1994, citing a precedent from the Hon'ble High Court of Karnataka. However, penalties under Sections 77 and 78 were upheld in the impugned order.

2. Penalties under Sections 77 & 78 of the Finance Act:
The Tribunal considered the possibility of waiving penalties under Sections 77 and 78 by invoking the provisions of Section 80 of the Finance Act. It was noted that if the appellants had promptly paid the service tax, they would have been eligible for CENVAT credit benefits, making the situation revenue-neutral. The Tribunal found that the appellants did not cause tax evasion, as their claim of the error being a mistake appeared to be valid. Consequently, the penalties under Sections 77 and 78 were set aside.

3. Decision and Conclusion:
After hearing both sides and considering the circumstances, the Tribunal decided to allow the appeal and annul the penalties imposed on the appellants. The duty liability had already been discharged by the appellants, and the amount paid was confirmed. The Tribunal emphasized that the issue could be resolved promptly based on the discussions, leading to the setting aside of penalties while confirming the payment made by the appellants. The operative part of the order was pronounced in open court on 23.05.2014.