2015 (1) TMI 1048 - HC - Service Tax

Short payment of tax - Travel Agent service - Penalty u/s 78 - Held that - Main contention put forth on the side of the appellant is that the respondent has not paid Service Tax in respect of the service rendered by it and further, the respondent has made only short payment. Under the said circumstances, the claim made by the Department is inconsonance with law and the same cannot be turned out, but both the Commissioner of Appeals as well as CESTAT without assigning proper reasons have rejected the demand, made by the Department and in view of the discussion made earlier, this Court has found considerable force in the contention put forth on the side of the appellant and the substantial question of law settled on the side of the appellant are having substance - Decided in favour of Revenue.

Summary

Issues:
Challenge to impugned order passed by CESTAT in a Service Tax case.

Analysis:
The judgment concerns a Civil Miscellaneous Appeal challenging an order passed by the CESTAT in a Service Tax matter. The respondent, a travel agent, was found to have made only a short payment of Service Tax from 1-4-1999 to 30-6-2004. The issue of penalty under Section 78 of the Finance Act, 1994 was raised due to the short payment. The initial demand upheld in Order-in-Original was set aside by the Commissioner of Appeals (Madurai), leading to an appeal by the Department before the CESTAT.

The CESTAT dismissed the Department's appeal, prompting the present Civil Miscellaneous Appeal. A substantial question of law was raised regarding the CESTAT's dismissal of the Revenue's Appeal without addressing the interpretation of the statute, relying instead on a case citation. The appellant contended that the respondent's admission of short payment made them liable for penalty under Section 73 of the Finance Act, 1994. The appellant argued that both the Commissioner of Appeals and the CESTAT erred in their decisions, citing a case law to support the imposition of penalties under Section 78 of the Finance Act, 1994.

The appellant maintained that the respondent had not paid the full Service Tax owed and had only made a short payment, justifying the Department's claim. The Court found merit in the appellant's contentions, noting that the decisions of the lower authorities lacked proper reasoning. Relying on the arguments presented by the appellant and the case law cited, the Court allowed the Civil Miscellaneous Appeal, setting aside the orders of the Commissioner of Appeals and the CESTAT. The judgment concluded by allowing the appeal without costs, thereby overturning the decisions of the lower authorities.