2015 (12) TMI 956 - AT - Service Tax

Imposition of penalty - Default in payment of service tax - appellant did not file ST-3 Returns - Held that - Appellant got registered in July 2008 and visit of the officers tookplace on 29.1.2009. Even though the tax for January 2009 was liable to be paid only on 31.3.2009, the appellant paid the entire liability on 04.2.2009. In fact, some amount was paid in excess. This shows that the appellant had reasonable cause for non-payment which is financial difficulty and the appellant being new to the service tax provisions, I consider that a lenient view as regards the penalty is warranted. Accordingly, in my opinion, this is a fit case for invoking the provisions of Section 80 of the Finance Act to waive the penalty. Accordingly service tax amount paid with interest is confirmed as correctly paid and penalty imposed is waived by invoking the provisions of Section 80 of the Finance Act, 1994 - Decided in favour of assessee.

Summary

Issues:
- Liability of the appellant to pay penalty for default in payment of service tax.

Analysis:
The judgment revolves around the issue of whether the appellant is liable to pay a penalty for default in the payment of service tax. The appellant, a registered partnership firm providing Real Estate Agency Services, faced a show-cause notice from the department for appropriating service tax and interest already paid, along with proposals for imposing penalties under various sections of the Finance Act, 1994. The Order-in-Original confirmed the appropriation of tax and interest already paid, along with imposing penalties. The appellant contended that the delay in payment was due to financial difficulty and lack of familiarity with service tax provisions. The appellant cited a Board's Circular stating that payment with interest exempts the need for a show-cause notice. On the other hand, the Revenue argued that the appellant's failure to file ST-3 Returns and pay tax indicated a deliberate attempt to evade payment, justifying the penalties imposed.

The judge considered the timeline of events, noting that the appellant registered in July 2008 and the department's visit occurred in January 2009. Despite the tax for January 2009 being due on March 31, 2009, the appellant paid the entire liability on February 4, 2009, with an excess amount. The judge acknowledged the appellant's financial difficulty and unfamiliarity with service tax provisions as reasonable causes for the delay in payment. Taking a lenient view, the judge invoked Section 80 of the Finance Act to waive the penalty. Consequently, the service tax amount paid with interest was deemed correctly paid, and the penalty imposed was waived. The appeal was disposed of in favor of the appellant with the penalty being waived under Section 80 of the Finance Act, 1994.