2014 (12) TMI 541 - AT - Service Tax

Penalty u/s 76 - Whether penalty should be imposed upon the appellant when the entire amount of disputed Service Tax and interest for the delayed payment has already been paid - Held that - It is the case of the appellant that a clear remark was made in the ST-3 return of the relevant period that appellant has stopped paying. Service Tax in view of Delhi High Court s order. This fact is not disputed as per Para-2 of the OIA dated 17-11-2011-21-11-2011 passed by the first appellate authority. There is also no evidence on record that Service Tax was separately recovered by the customers from their clients and kept with him. In view of Delhi High Court s order, appellant has a reasonable cause for paying the Service Tax. The same was paid, along with interest, as per the provisions of Section 80(2) inserted w.e.f. 28-5-2011. In view of the above observations and the settled position as per the relied upon case laws, it is held that no penalty was attracted upon the appellant in this case and appeal filed by the appellant is required to be allowed. - Decided in favour of assessee.

Summary

Issues Involved:
- Appellant's failure to pay Service Tax on renting of immovable property due to ongoing litigation
- Imposition of penalty under Section 76 of the Finance Act, 1994

Analysis:

Issue 1: Appellant's failure to pay Service Tax
The appeal was filed against an order due to the appellant's non-payment of Service Tax on renting immovable property during litigation. The appellant argued that they stopped payment based on a Delhi High Court order and later paid the due amount along with interest. The appellant contended that no penalty should be imposed under Section 76 of the Finance Act, 1994. The appellant's representative cited relevant case laws to support their argument, emphasizing the absence of an intention to evade payment.

Issue 2: Imposition of Penalty
The Revenue defended the first appellate authority's decision to impose a penalty. However, upon hearing both sides and examining the case records, the Tribunal found that the appellant had clearly stated in their ST-3 return the reason for not paying the Service Tax, i.e., the Delhi High Court's order. The Tribunal noted that there was no evidence of the appellant collecting the tax from customers but not remitting it. Considering the appellant's reasonable cause for non-payment and the subsequent complete payment along with interest, the Tribunal held that no penalty should be imposed. The decision was supported by the provisions of Section 80(2) and previous case laws referenced in the proceedings.

In conclusion, the Tribunal allowed the appeal, ruling that no penalty was warranted in this case.