2015 (6) TMI 343 - AT - Service Tax

Waiver of penalty u/s 80 - Whether the fact of the appellant s mother suffering from heart decease, resulting in non-payment of tax, can be held to be sufficient reasonable cause so as to set aside the penalty imposed on the appellant - Held that - Appellant did not shut their business on the said ground and continued to do so as during the said period, As is seen they have done the business to the extent of more than ₹ 17 lakhs. They also filed the returns showing their tax liability. The said facts are sufficient to observe that the appellant was aware of his liability to pay service tax. I also note that the service tax required to be paid by the appellant was not much on the higher side and they have done business of around ₹ 17 lakhs. They were definitely in a position to deposit the service tax of ₹ 2,00,000. However, instead of doing so, they took more than one and a quarter year to deposit the amount in question. - ill-health of the mother of the assessee s partner cannot be considered as a reasonable cause so as to invoke the provisions of Section 80 of the Finance Act, 1994. - Decision in the case of Triton Communication Pvt. Ltd. Vs. Commissioner of Central Excise, Mumbai 2005 (7) TMI 595 - CESTAT, MUMBAI - no justifiable reason to interfere with the order of the lower authority - Decided against assessee.

Summary

Issues:
1. Non-payment of service tax and imposition of penalty under Section 76 of Finance Act, 1994.
2. Invocation of Section 80 of the Finance Act, 1994, for setting aside the penalty due to reasonable cause for non-payment of service tax.

Issue 1: Non-payment of service tax and imposition of penalty under Section 76 of Finance Act, 1994
The appellant, a service provider under "Architect Service," filed ST-3 returns for the period 1.4.2008 to 30.9.2008, showing a service value of Rs. 17,55,000. However, they failed to deposit the service tax of Rs. 2,10,600 along with Education Cess and Secondary & Higher Education Cess mentioned in the returns. The service tax was eventually paid after a delay of one year and three months. Proceedings were initiated against the appellant for the confirmation of penalty under Section 76 of the Finance Act, 1994, amounting to Rs. 1,11,000.

Issue 2: Invocation of Section 80 of the Finance Act, 1994, for setting aside the penalty
The appellant contended that their inability to pay service tax was due to expenses incurred for their mother's heart treatment, and they were not recovering the service tax from clients. They sought to set aside the penalty by invoking Section 80 of the Finance Act, 1994, which exempts penalty imposition if a reasonable cause for non-payment of service tax is shown. The Revenue argued that the appellant was aware of their tax liability and continued business operations during the relevant period, thus Section 80 could not be invoked. The appellant did not dispute the service tax liability but sought to waive the penalty under Section 80.

After considering both sides, the Tribunal found that the appellant's mother's ill-health, leading to non-payment of tax, could not be deemed a reasonable cause to set aside the penalty. The appellant did not cease business operations despite the circumstances and had a turnover of over Rs. 17 lakhs during the period. The Tribunal referenced a similar case where financial difficulties were not accepted as a valid reason for delayed tax payments. Consequently, the Tribunal upheld the penalty imposed by the lower authority, as there was no justifiable reason to interfere with the order.

This detailed analysis of the legal judgment highlights the issues of non-payment of service tax and the invocation of Section 80 of the Finance Act, 1994, providing a comprehensive overview of the case and the Tribunal's decision.