2016 (1) TMI 262 - AT - Service Tax

Rejection of VCES - Levy of penalty - wavier u/s 80 - appellant had voluntarily paid the service tax dues alongwith interest and penalty equivalent to 25% of the tax on 30.10.2012 - the appellant filed the declaration under VCES Scheme for immunity of interest and penalty before the designated authority, which was rejected. - Held that - Rejection of their declaration for immunity of interest and penalty under VCES Scheme is also found to be proper, as the said Scheme was introduced w.e.f. 10.05.2013 only, and it pertained to tax dues pending as on 01.03.2013 only. It is observed that the Commissioner (Appeals) has considered the plea of the appellant for waiving the penalty under Section 80. Delayed payment was not due to any bonafide confusion occurring in the prevalent statue and related provisions were quite crystal clear. So their request for waiver of penalty does not survive at all as they also failed to give any reasonable cause. No relief granted to appellant - Decided against the assessee.

Summary

Issues involved: Refund claim rejection, waiver of penalty under Section 80 of the Finance Act, 1994.

Refund Claim Rejection:
The appellant, a firm, filed an appeal against the rejection of a refund claim amounting to &8377; 5,38,922.00. The appellant, represented by a consultant, argued that due to lack of awareness about service tax provisions, they failed to pay the dues on time. They voluntarily paid the service tax, interest, and penalty after being notified by the Department. The appellant also filed a declaration under the Voluntary Compliance Encourage Scheme (VCES) for immunity of interest and penalty, which was rejected. The appellant sought waiver of penalty under Section 80 of the Finance Act, 1994. The Authorized Representative contended that the penalty cannot be waived as per the provisions of Section 80, which states that no penalty shall be imposed if the assessee proves reasonable cause for the failure.

Waiver of Penalty under Section 80:
The appellant argued that they were unaware of the service tax provisions, leading to delayed payment. However, it was noted that ignorance of the law is not an excuse. The appellant voluntarily paid the service tax dues, interest, and penalty. The rejection of the declaration for immunity under the VCES was deemed appropriate as the scheme was applicable to tax dues pending as of a specific date. The Commissioner (Appeals) considered the plea for waiving the penalty under Section 80 but found that there was no reasonable cause for the delayed payment. The Commissioner (Appeals) cited Section 80 of the Finance Act, 1994, which states that penalty shall not be imposed if the assessee proves reasonable cause for the failure. Since the appellant failed to provide any reasonable cause for the delay, the request for waiver of penalty was denied.

Conclusion:
After considering the arguments from both sides and reviewing the records, it was concluded that the appellant's payment of service tax dues, interest, and penalty was justified despite their lack of awareness of the law. The rejection of the immunity declaration under the VCES and the refusal to waive the penalty under Section 80 were upheld. The Tribunal found no reason to interfere with the decision of the Commissioner (Appeals) and upheld the impugned order, ultimately rejecting the appeal filed by the appellant.