2014 (12) TMI 1137 - AT - Service Tax

Imposition of penalty - Invocation of Section 80 - GTA service - Payment of tax as service recipient - Held that - Appellant is a proprietary concern and not assisted by any professionally qualified officer. Even though, ignorance of law is not an excuse, yet the statutory provisions under Section 80 of Finance Act, 1994 have been made to enable officers to take a lenient view when assessees make omissions/commissions in payment of service tax. Normally, assumption of a layman would be that tax is to be paid by the service provider and if an assessee proceeds on this basis, they cannot be found fault with. At the same time, it has to be noted that each case has to be considered on its own merits and the conduct of the parties in relation to the demands made by the Department etc. In this case, in the month of October-November, 2009, the requirements of payment of service tax were pointed out and in December-January, thereafter, the appellant paid the entire amount of tax with interest. In view of the promptness of the appellant in paying the tax with due interest and in view of the peculiar circumstances which I have already considered above, I consider this is a fit case of invoking the provisions of Section 80 of Finance Act, 1994 - Decided in favour of assessee.

Issues:
1. Liability for non-payment of service tax
2. Reasonable cause for non-payment of service tax
3. Invocation of extended period for penalty
4. Application of Section 80 of Finance Act, 1994
5. Relief from penalty under Section 78 of Finance Act, 1994

Analysis:
1. The issue in question pertains to the liability for non-payment of service tax by the appellant. The appellant, a proprietary concern, had accepted and paid the service tax liability upon being notified by the Department. The contention was that the appellant, being a layman and not a professionally qualified officer, believed that the service tax was to be paid only by the service provider and was unaware of the Notification requiring the recipient to pay the tax. The appellant promptly paid the tax upon realization of the omission.

2. The authorized representative of the appellant argued that there was a reasonable cause for the non-payment of service tax, citing ignorance of the law as the primary reason. The respondent, on the other hand, contended that the extended period for invoking penalty was justified, and the appellant needed to demonstrate a reasonable cause for the waiver of penalty. The Tribunal considered the submissions from both sides.

3. The Tribunal acknowledged that ignorance of the law is not a valid excuse; however, it noted that the statutory provisions under Section 80 of the Finance Act, 1994 allow for leniency in cases where omissions/commissions occur in the payment of service tax. Each case must be evaluated on its own merits, taking into account the conduct of the parties. In this case, the appellant promptly paid the tax with interest upon being informed of the requirement, showing sincerity in rectifying the error.

4. Considering the circumstances, including the appellant's promptness in payment and the peculiar situation of being a layman without professional assistance, the Tribunal deemed it appropriate to invoke the provisions of Section 80 of the Finance Act, 1994. Consequently, the Tribunal allowed the appeal by setting aside the penalty imposed under Section 78 of the Finance Act, 1994, providing relief to the appellant from the penalty.

5. In conclusion, the Tribunal found in favor of the appellant, recognizing the unique circumstances and the prompt action taken to rectify the non-payment of service tax. By invoking Section 80 of the Finance Act, 1994, the Tribunal granted relief to the appellant by setting aside the penalty under Section 78 of the same Act.

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