2015 (8) TMI 1188 - AT - Service Tax

Erection, Commissioning and Installation service - Penalty u/s 76 - Held that - Appellants are rendering Erection, Commissioning and Installation service to various customers under turnkey projects across India and to arrive monthly service tax liability they need to collect the data from all their sites. This is not the case of default payment and the appellants remitted the interest amount on 20.12.2007 during the audit. The Hon ble High Courts and the Tribunal have held in number of decisions that benefit of Section 73 (3) to be extended and no penalty can be imposable. This Tribunal in the case of Shriram EPC Ltd. (2014 (2) TMI 713 - CESTAT CHENNAI) has allowed the appeal by relying the decision of the Hon ble High Court of Karnataka in the case of CCE, LTU, Bang. Vs. Adecco Flexione (2011 (9) TMI 114 - KARNATAKA HIGH COURT). - penalty imposed by the adjudicating authority under Section 76 is not sustainable. Accordingly, the impugned order imposing penalty under Section 76 of the Finance Act is set aside - Decided in favour of assessee.

Summary

Issues:
- Imposition of penalty under Section 76 of the Finance Act for delayed payment of service tax.

Analysis:
The case involved an appeal arising from an order passed by the Commissioner of Service Tax, Chennai, imposing a penalty under Section 76 of the Finance Act for delayed payment of service tax. The appellants, engaged in providing services of 'Erection, Commissioning and Installation,' were found to have not remitted the service tax on due dates for the period October 2006 to September 2007, leading to the imposition of a penalty of Rs. 1,87,452. The appellant argued that they had paid the service tax and interest before the show cause notice was issued, and the delay in payment was due to data collection and compilation for turnkey projects. They sought waiver of penalty under Section 80 of the Finance Act, citing relevant case laws to support their plea.

Upon considering the submissions, the Tribunal focused on the limited issue of the penalty imposed under Section 76. It was noted that the delay in payment ranged from 3 to 22 days each month, attributed to the process of collecting data from various project sites for calculating the monthly service tax liability. The Tribunal found the delay to be genuine and justified, emphasizing that it was not a case of default payment as the appellants had remitted the interest amount during an audit. Referring to previous decisions, including the case of Shriram EPC Ltd., the Tribunal highlighted that the benefit of Section 73(3) should be extended in cases where the tax liability and interest were paid, and there was no active suppression. Drawing parallels with the decision in the case of Adecco Flexione Work Force Solutions Ltd., the Tribunal set aside the penalty, concluding that the penalty imposed under Section 76 was not sustainable in the present case.

In light of the above analysis, the Tribunal allowed the appeal, setting aside the penalty imposed under Section 76 of the Finance Act. The decision was based on the similarity of the case to previous rulings and the genuine nature of the delay in payment, ultimately leading to the conclusion that the penalty was unwarranted in the circumstances presented.