2015 (7) TMI 634 - AT - Service Tax

Imposition of late fees - Section 77 - Delay in filing of returns - Held that - Service tax for the period October, 2011 to March, 2012 was already paid by the appellant which was approximately ₹ 1400/- for the period April, 2012 to June, 2012 as no services were provided. Therefore, service for the latter period tax liability was NIL. - It is not case of demand of service tax which was paid by the appellant before the issue of Show Cause Notice. Therefore, appellant was required to pay the late fees under Section 17 of the Finance Act, 1994. However looking to the service tax involved during the period October, 2011 to March, 2012 the late fee imposed upon the appellant is required to be reduced to ₹ 500/-, as the amount of penalty has to be appropriate to the service tax liability which was also paid by the appellant in time. - Decided partly in favour of assessee.

Summary

Issues:
Imposition of late fee penalty under Section 77 of the Finance Act, 1994 for delay in filing of ST-3 returns for the period October 2011 to March 2012 and April 2012 to June 2012.

Analysis:
The appellant argued that the late filing was due to reasons such as a virus in the computer system, deletion of accounting records, and blocked user credentials. They contended that they filed the returns suo motu with the department. For the period April 2012 to June 2012, where there was NIL payment of service tax, they relied on a CESTAT Kolkata judgment and a case law to support their argument that no late fees are payable when the service tax payable is NIL. They also cited a CBEC Circular to assert that once the entire service tax is paid, there is no need for a Show Cause Notice for penalties.

The Revenue argued that the statutory imposition of late fees under Section 77 of the Finance Act, 1994 applies in this case, emphasizing that the CBEC Circular mentioned by the appellant does not apply as it was not a case of service tax payment. They highlighted that the judgment cited by the appellant is not applicable due to differing facts in the present appeal.

After hearing both sides and reviewing the case records, it was found that the service tax for the relevant periods had been paid by the appellant. For the period with NIL service tax liability, the tribunal referred to a Kolkata CESTAT judgment where late fees were waived for nil returns. Consequently, the late fee for the period April 2012 to June 2012 was set aside.

Regarding the late fee confirmed for the period October 2011 to March 2012, the tribunal considered the appellant's reliance on a case law and a CBEC Circular. While acknowledging the late fee requirement under the Finance Act, 1994, the tribunal reduced the late fee imposed on the appellant to an appropriate amount relative to the service tax liability paid in time. The appeal was allowed to this extent.