2015 (12) TMI 336 - AT - Service Tax

Imposition of penalty - Evasion of tax - Maintenance and Repair Service - Held that - Cooperative attitude shown by the appellant does not throw any light on malafides of the appellant. When the appellant has cooperated to discharge the liability and that to such liability based on income tax returns, it would not be proper to penalize the appellant for the reasonable cause stated and permitted by section 80 of Finance Act, 1994 to immune the bonafide cases from levy of penalty. However, delay in seeking registration shall call for penalty as that has been imposed by learned adjudicating authority under section 77 of Finance Act, 1994. That penalty of ₹ 5,000/- is confirmed. There shall be no penalty under sections 76 & 78 of Finance Act, 1994 - Decided partly in favour of assessee.

Summary

Issues: Liability determination under Maintenance and Repair Service category, delay in depositing service tax, cooperative attitude of the appellant, penalty imposition for delay in seeking registration.

The judgment addresses the liability determination of the appellant under the Maintenance and Repair Service category based on income tax returns for the period from October 2004 to March 2008. The appellant, a small contractor with annual contract receipts of &8377; 10 lakhs to &8377; 15 lakhs, cooperated with Revenue and discharged the tax liability before the show-cause notice was issued. The appellant, despite being unaware of the law, sought registration from April 2008, indicating no intention to evade revenue. The appellant acknowledged the liability without disputing it and cooperated with Revenue throughout the process.

The cooperative attitude of the appellant, along with the absence of malafides, led the tribunal to conclude that penalizing the appellant for the delay in depositing service tax would not be appropriate. The tribunal invoked section 80 of the Finance Act, 1994, which allows immunity from penalty for bonafide cases. However, the delay in seeking registration attracted a penalty of &8377; 5,000 under section 77 of the Finance Act, 1994. Notably, no penalties were imposed under sections 76 and 78 of the Finance Act, 1994, due to the reasons mentioned above. The judgment partially allowed the appeal, confirming the penalty for delay in seeking registration while exempting the appellant from other penalties.