2015 (7) TMI 967 - AT - Service Tax

Penalty u/s 76 & 78 - Business auxiliary services - Receipt of commission - Held that - By not paying service tax during the relevant period appellant cannot claim the benefit of Section 80 of Finance Act 1994 and therefore penalty is imposable. - a lenient view is called for, which has been taken by the original authority in the facts and circumstances of the case which show that appellants promptly paid the tax as soon as the omission was pointed out. I also find that these were initial years of levy of service tax on the services and also initially commission agents were exempted and these are facts which have been rightly taken into account by the original authority - Decided in favour of assessee.

Summary

Issues:
Challenge against penalties under Section 76 & 78 of Finance Act 1994.

Analysis:
The case involved a challenge against penalties imposed under Section 76 & 78 of the Finance Act 1994. The appellant had received commission/brokerage charges and failed to discharge the service tax liability for the amounts received in different years. The appellant initially claimed ignorance of the service tax provisions but later paid the tax after being advised about the basic exemption limit. Despite showing the commission amounts as "Sundry Debtors" in the balance sheet, it was revealed that the appellant had indeed received the commissions. The original adjudicating authority held the tax and interest paid to be proper, waiving the penalty under Section 80 of the Finance Act 1994. However, on appeal by the Revenue, penalties were imposed under Sections 76 and 78, leading to the appellant challenging the decision.

The appellate tribunal noted the absence of the appellant in multiple instances and proceeded with the hearing in their absence. The learned AR supported the impugned order-in-appeal, emphasizing that the appellant cannot claim the benefit of Section 80 by not paying the service tax during the relevant period, thus justifying the imposition of penalties. The tribunal considered the original adjudicating authority's detailed observations, which resulted in the waiver of penalties based on the absence of malafide intention and confusion regarding taxability due to changes in definitions of notifications.

The tribunal cited relevant case laws to support the waiver of penalties in cases of ignorance of statutory provisions and non-compliance. It acknowledged the appellant's prompt payment of tax upon realization of the omission, especially during the initial years of service tax levy on such services. Considering the circumstances and the appellant's actions, the tribunal found a lenient view appropriate and allowed the appeal, setting aside the penalties imposed under Sections 76 and 78 of the Finance Act 1994. The operative portion of the order was pronounced in open court on 24.12.2014.