2014 (7) TMI 824 - AT - Service Tax

Levy of penalty - benefit of reduced penalty u/s 78 whereas service tax was deposited without interest before issue of SCN - Held that - no reason to reduce the same as the appellant has failed to deposit the interest amount along with service tax before the issue of show-cause notice or within the time-limit prescribed under the Act. In such a case, no infirmity in the order of the Commissioner (Appeals) - Decided against assessee.

Summary

Issues:
- Failure to pay service tax and interest
- Imposition of penalties under sections 76, 77, and 78 of the Finance Act, 1994

Analysis:
The appeal before the Appellate Tribunal CESTAT Ahmedabad involved a case where the Gujarat University, Ahmedabad, was providing mandap keeper services without service tax registration or payment from October 1999 to August 2004. The Department alleged that the university had received payments for letting out open lands for various functions without paying service tax. The appellant paid a portion of the service tax liability upon notification by the Department. Subsequently, a show-cause notice was issued, demanding service tax, interest, and proposing penalties. The original authority confirmed the notice, appropriating the amount already paid and imposing penalties under sections 75, 76, 77, and 78 of the Finance Act, 1994. The Commissioner (Appeals) remanded the matter for quantification of penalties under sections 76 and 77, reducing the penalty under section 78 to Rs. 50,000. The appellant challenged the order concerning interest and penalty under section 78 before the Tribunal.

The Departmental Representative argued that the appellant's failure to pay interest along with the tax amount before the show-cause notice rendered their plea for non-imposition of penalty unsustainable. The Tribunal noted that the Commissioner (Appeals) had remanded the matter for quantification of penalties under sections 76 and 77, which the appellant did not contest. Regarding the penalty under section 78, the Tribunal upheld the decision, stating that the appellant had not deposited the interest amount with the service tax before the notice or within the prescribed time limit. Consequently, the Tribunal found no fault in the Commissioner (Appeals) order and dismissed the appeal, affirming the imposition of penalties.

In conclusion, the Tribunal rejected the appeal, upholding the imposition of penalties under section 78 of the Finance Act, 1994, due to the appellant's failure to pay interest along with the service tax within the stipulated timeframe, as mandated by the Act.