2014 (8) TMI 583 - AT - Service Tax

Waiver of penalty u/s 80 - benefit of reduced penalty u/s 78 to 25% - Manpower Supply Services - Held that - Appellant was very prompt in collecting the Service and having collected it is surprising that the appellant chose not to deposit the amount with the Government. Under these circumstances, it would be impossible to take a view that the appellant was ignorant of law and because of remote location tax was not paid and returns were not filed - once Service Tax has been collected and neither registration was obtained nor returns were filed, provisions of Section 80 cannot be invoked - In that case the appellant had taken registration and was filing the return and on that ground a view was taken that suppression of facts or mis-declaration could not have been invoked. Admittedly, in this case the facts are entirely different. Therefore, this is not a fit case for invoking the Section 80 of the Finance Act, 1994. However, I find that in this case both the lower authorities have not given an option to pay the tax, interest and penalty within 30 days of the communication of the order in view of the decision of this Tribunal in the case of Swati Chemicals Inds. Ltd. - 2009 (7) TMI 1038 - CESTAT AHMEDABAD and the Hon ble Gujarat High Court in the case of CCE, Ahmedabad v. Akash Fashion Prints Pvt. Ltd. - 2009 (1) TMI 113 - GUJARAT HIGH COURT . Such an option can be extended by this Tribunal. In this case, the appellant has already paid the Service Tax and interest and, therefore, only penalty remains to be paid. If the appellant makes payment of 25% of the penalty amount within 30 days of the communication of this order, the balance amount of penalty need not be paid - Decided partly in favor of assessee.

Summary

Issues: Failure to pay Service Tax, imposition of penalty, waiver of penalty under Section 78, invoking Section 80 of the Finance Act, 1994, interpretation of previous Tribunal decisions.

In this judgment by the Appellate Tribunal CESTAT AHMEDABAD, the appellant, engaged in providing Manpower Supply Services, failed to pay Service Tax from June 2005 to June 2006 despite collecting the amount from customers. The proceedings resulted in a demand for Service Tax and imposition of a penalty equal to the tax demanded. The appellant argued that due to operating in a remote area, they failed to pay the tax promptly. The appellant also cited a previous Tribunal decision to support their case for penalty waiver under Section 78 and invoking Section 80 of the Finance Act, 1994. The Tribunal noted the prompt collection of Service Tax by the appellant but found it surprising that the amount was not deposited with the Government. The Tribunal rejected the appellant's arguments for penalty waiver under Section 78 and invoking Section 80, highlighting the differences in facts from the precedent case cited by the appellant. However, the Tribunal allowed the appellant to pay 25% of the penalty amount within 30 days to avoid paying the full penalty, citing previous decisions for such options. Failure to meet this deadline would result in a penalty equal to the Service Tax demanded. The appeal was rejected except for this relief. The judgment emphasizes the importance of timely tax payment and compliance with registration and filing requirements to avoid penalties.