2015 (7) TMI 674 - AT - Service Tax

Waiver of pre deposit - Penalty u/s 78 - Held that - Applicant has deposited the entire amount of Service Tax. The applicability of penal provisions whether resulting out of suppression of facts relating to collection of service tax and non-deposit with the Government, would be examined at the time of disposal of the appeal. At this stage, the offer to deposit ₹ 10.00 Lakhs seems to be reasonable. Consequently, the applicant is directed to deposit ₹ 10.00 Lakhs within a period of eight weeks from today and on deposit of the said amount, balance dues adjudged would stand waived and its recovery stayed during the pendency of the appeal. - Stay granted.

Summary

Issues: Application for waiver of pre-deposit of Service Tax and penalty under Section 78 of the Finance Act, 1994.

Analysis:
- The appellant sought waiver of pre-deposit of Service Tax amounting to Rs. 1.88 Crores and penalty of an equal amount imposed under Section 78 of the Finance Act, 1994.
- The appellant had already deposited Rs. 1.90 Crores towards Service Tax but faced financial difficulties resulting in a delay in discharging the service tax liability.
- The appellant's representative emphasized that there was no intention to evade the service tax liability, attributing the delay to severe financial problems faced by the company.
- On the contrary, the Commissioner for the Revenue argued that non-payment of service tax, despite being collected from clients and deposited only after Departmental intervention, indicated mens rea, making Section 78 of the Finance Act, 1994 applicable.
- The Tribunal observed that the appellant had deposited the entire Service Tax amount and decided that the applicability of penal provisions would be examined during the appeal process.
- Considering the circumstances, the Tribunal found the offer to deposit Rs. 10.00 Lakhs reasonable and directed the appellant to deposit this amount within eight weeks.
- Upon depositing the specified amount, the balance dues would be waived, and recovery stayed during the appeal's pendency. The compliance was required to be reported by a specified date.

This judgment highlights the Tribunal's consideration of the appellant's financial difficulties, the nature of the delay in service tax payment, the Commissioner's argument regarding mens rea, and the Tribunal's decision to allow a partial deposit while waiving the balance dues during the appeal process.