2015 (3) TMI 42 - AT - Service Tax

Penalty under Section 76, 77 and 78 - Short Payment of service tax - Demand of differential duty - Held that - After going through the facts of the case, the only error committed by the appellant is that they have not included the amount of TDS deducted at the time of calculating the taxable service. That may be due to the ignorance of law. Therefore, appellant are entitled to benefit of Section 80 of the Finance Act, 1994. Accordingly, as per Section 73 (1) of the Finance Act, 1994, the appellant were not required to be issued show-cause notice for imposition of penalty. Accordingly, after giving benefit of Section 80, I set aside the imposition of penalty against the appellant under various provisions of the Finance Act, 1994. - Decided in favour of assessee.

Summary

Issues: Appeal against penalty under Section 76, 77, and 78 of the Finance Act, 1994.

Analysis:
1. The appellant, a provider of taxable services, appealed against an order confirming penalties under Sections 76, 77, and 78 of the Finance Act, 1994. An audit revealed that the appellant did not include the amount deducted as TDS in the taxable value, resulting in a short payment of service tax. The appellant paid the differential tax with interest, but penalties were imposed. The main contention was the inadvertent failure to include TDS in taxable value.

2. The appellant argued for the benefit of Section 80 of the Finance Act, 1994, citing inadvertent omission of TDS amount. The appellant's representative requested the penalties to be set aside based on this provision. The respondent, however, supported the impugned order of penalties.

3. The Tribunal, after considering both parties' submissions, noted the appellant's error in not including TDS amount due to possible ignorance of the law. The Tribunal found the appellant eligible for the benefit of Section 80 of the Finance Act, 1994. Consequently, under Section 73(1) of the Act, the appellant was not required to be issued a show-cause notice for penalty imposition. Therefore, the Tribunal set aside the penalties imposed under various provisions of the Finance Act, 1994.

4. The judgment concluded by disposing of the appeal in favor of the appellant, granting relief from the penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The decision was based on the appellant's entitlement to the benefit of Section 80 due to the inadvertent error in excluding the TDS amount from the taxable value, as per the provisions of the Act.