2014 (8) TMI 580 - AT - Service Tax

Demand of service tax - Penalty u/s 76 & 77 - assessee being outside India had no knowledge of breach of law - Held that - When the reasonable ground as bonafide no knowledge of breach of law was advanced by the learned Chartered Accountant it is proper to waive penalties imposed under Sections 76 & 77 of the Finance Act, 1994 since learned Chartered Accountant also says that the appellant has sought registration subsequently under the law for providing taxable service of the nature covered by original order. In the result, both stay application and appeal are disposed. Service tax levied is confirmed with interest. Only penalty is waived - Decided partly in favour of assessee.

Summary

Issues: Service tax demand, penalty imposition under Sections 76 & 77 of the Finance Act, 1994.

The judgment pertains to a service tax demand of Rs. 24,714 followed by interest and penalty under Sections 76 & 77 of the Finance Act, 1994. The Adjudicating Authority had imposed a penalty of Rs. 1000 under Section 77. The appellant argued that being out of India, compliance with the law was not feasible, and there was no deliberate violation. The appellate court, although generally not considering new grounds during appeal, admitted the appellant's reason for default due to being out of India, as it was beyond their control and essential for justice. The appellate order did not address whether there was a deliberate breach of the law. The Chartered Accountant representing the appellant stated that the appellant had subsequently sought registration under the law for providing taxable services as per the original order. Consequently, the appellate tribunal decided to confirm the service tax with interest but waived the penalties imposed under Sections 76 & 77, as the grounds presented by the Chartered Accountant were reasonable. The appeal was partially successful, with the service tax confirmed, interest levied, and only the penalty waived.