2014 (9) TMI 484 - AT - Service Tax

Waiver of penalty u/s 80 - penalty imposed u/s 78 for short payment - GTA service - On scrutiny of Service Tax returns, it was observed that the Service Tax was paid on much lesser amount as compared to the amount shown in the head of freight & cartage resulting in short payment of service tax - Held that - Proper service tax was not paid as lesser amount of service tax was paid resulting in short payment of service tax amounting to ₹ 7,83,266/-. These discrepancies showing short payment of service tax came to surface when anti-evasion wing detected the evasion. Mens rea was manifested as respondents did not deposit the service tax of their own and non-payment of service tax continued for years. Further no bonafide could be proved as no reasonable ground could be shown by the respondent. Bombay High Court judgement in the case of Riya Travels and Tours Vs. Union of India 2010 (7) TMI 774 - BOMBAY HIGH COURT is in the favour of revenue as omission was not bonafide as it was detected by visiting officers of DGCEI. - invoking section 80 and waiving penalty is not proper - Decided against the assessee.

Issues:
- Interpretation of Section 80 of the Finance Act, 1994
- Justification for waiver of penalties under Section 80
- Disclosure of material facts in periodical ST-3 returns
- Mens rea in non-payment of service tax
- Application of judicial pronouncements on penalty imposition
- Discrepancies in payment of service tax
- Bonafide deposit of service tax before and after show cause notice

Interpretation of Section 80:
The case involved an appeal by the Revenue against the waiver of penalties granted under Section 80 of the Finance Act, 1994. The Revenue contended that Section 80 should only apply if the assessee can prove a reasonable cause for the failure to pay service tax. The Department cited judicial precedents to support their argument regarding the interpretation of Section 80.

Justification for Waiver of Penalties under Section 80:
The Respondent argued that they had paid 80% of the service tax voluntarily before the issuance of the show cause notice, claiming that this justified the invocation of Section 80. They also referenced judicial pronouncements to support their position that penalties should not be imposed if the service tax and interest were paid before the show cause notice.

Disclosure of Material Facts in Periodical ST-3 Returns:
The Revenue contended that the Commissioner (Appeals) had not properly considered that the assessee had not disclosed all material facts regarding the actual value of GTA service in their periodical ST-3 returns. The detection of discrepancies was made by the Anti-Evasion Wing.

Mens Rea in Non-Payment of Service Tax:
The Revenue argued that there was mens rea on the part of the appellant as they had not deposited the service tax on their own, and non-payment had continued for years. They emphasized that the liability to pay service tax was not in doubt and that the appellant should have discharged their tax liability timely.

Application of Judicial Pronouncements on Penalty Imposition:
Both parties referenced various judicial pronouncements to support their arguments regarding penalty imposition based on the timing of payment in relation to the show cause notice. The Respondent cited cases where penalties were not imposed if payment was made before the issuance of the show cause notice.

Discrepancies in Payment of Service Tax:
The examination of balance sheets and financial accounts revealed discrepancies in the payment of service tax, with a significant shortfall in the amount paid compared to the amount shown under the head of freight and cartage. The Anti-Evasion Wing detected the evasion, leading to the show cause notice.

Bonafide Deposit of Service Tax Before and After Show Cause Notice:
The Respondent claimed that they had paid a substantial portion of the service tax voluntarily before the show cause notice, indicating their bonafide intent. However, the Revenue argued that only 80% of the short-paid amount was deposited, and the full amount was not paid in full.

In the final judgment, the Tribunal found in favor of the Revenue, setting aside the Commissioner (Appeals) order that waived penalties under Section 80. The Tribunal agreed with the Revenue's arguments regarding deficiencies and irregularities in the case, emphasizing the importance of timely and accurate payment of service tax.

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