2015 (11) TMI 105 - AT - Service Tax

Levy of penalty - delay in payment of service tax Revenue contends that setting aside penalty under Sec. 78 is not justified as case involves collection of service tax and non-payment to Government - Held That - Declaration of liability in ST3 returns shows that assessee is duty bound and undertook to discharge service tax liability and whatever demand raised in SCN was paid alongwith interest Commissioner (Appeals) has taken all aspects into consideration and passed the order No infirmity found in the same Decided in favour of assessee.

Summary

Issues:
- Appeal against Order-in-Appeal maintaining service tax demand, Cenvat credit, and penalties waiver.
- Dispute over service tax liability for security services.
- Adjudication order confirming service tax demand, interest, and penalties.
- Appeal before Commissioner (Appeals) leading to waiver of penalties under Section 76 and 78.
- Revenue's challenge against dropped penalties under Section 76 and 78.
- Arguments on financial constraints and delayed payment of service tax.
- Review of impugned order and authorization concerns.
- Justification for waiver of penalties under Section 76 and 78.
- Consideration of submissions by both parties.

Analysis:
The case involved an appeal by the revenue against an Order-in-Appeal maintaining a service tax demand, Cenvat credit, and penalties waiver. The Respondent Company, engaged in providing Security Agency Service, was found liable for service tax payment following investigations by the Directorate General of Central Excise Intelligence. The adjudicating authority confirmed a service tax demand, interest, and penalties, which was later appealed by the Respondents. The Commissioner (Appeals) upheld the service tax demand, allowed Cenvat credit, and waived penalties under Section 76 and 78, leading to the revenue's appeal challenging the dropped penalties.

During the proceedings, the Revenue argued that the waiver of penalties was unjustified due to the collection of service tax and non-payment to the Government. They highlighted discrepancies in reported amounts and emphasized the financial constraints as insufficient grounds for penalty waiver. The Respondent countered, stating the case involved delayed payment rather than evasion of service tax. They presented evidence of bad debts and financial hardships, justifying the waiver of penalties under Section 76 and 78. The Review of the impugned order and concerns over authorization were also raised during the arguments.

The Tribunal carefully considered both sides' submissions and found the case to be a delay in service tax payment rather than evasion. The Respondents had declared their liability and paid the demanded amounts along with interest. The Commissioner's reasoned order, based on the waiver of penalties under Section 76 and 78, was upheld, considering the circumstances of delayed payment and financial hardships faced by the Respondents. The findings of the impugned order, including the Respondents' actions and intentions regarding service tax payment, were thoroughly examined, leading to the dismissal of the Revenue's appeal and upholding of the impugned order.