2016 (1) TMI 654 - AT - Service Tax

Levy of penalty for Delay of payment of service tax due to Bank refused to take deposit of tax in absence of PAN based registration number - delay of one week due to obtaining PAN based registration number - Held that - Appellant had paid the amount of tax within a week, on being so pointed out by the Revenue much before issuance of SCN, which was issued on 19.05.2011, months after the amount was paid. - no case of deliberate default or contumacious conduct, is made out against the Appellant - Penalty dropped - Decided in favor of assessee.

Issues:
1. Appeal against Order-in-Appeal No. 352-ST/LKO/2012 dated 30.07.2012
2. Allegations of non-payment of service tax and failure to file half-yearly returns
3. Imposition of penalty under Sections 77, 78 & 70 (1) of the Finance Act, 1994
4. Late fee imposition under Rule 7-C of the Service Tax Rules, 1994
5. Adjudication of the show-cause notice and confirmation of proposed demand
6. Appeal rejection by Commissioner (Appeals) and grounds for rejection
7. Tribunal's consideration of deliberate default or contumacious conduct
8. Payment of tax before issuance of show-cause notice
9. Waiver of penalty and final decision on the appeal

Analysis:
The case involved an appeal against Order-in-Appeal No. 352-ST/LKO/2012 dated 30.07.2012, where the Appellant, an authorized service station, was accused of not paying service tax and failing to file half-yearly returns. The Revenue alleged that the Appellant had not paid taxes after September 2007 and had not deposited interest on delayed payments. A show-cause notice was issued, demanding payment and imposing penalties under Sections 77, 78 & 70 (1) of the Finance Act, 1994, along with a late fee under Rule 7-C of the Service Tax Rules, 1994. The Commissioner (Appeals) upheld the findings of the original order, citing the Appellant's failure to obtain a PAN-based registration number and irregular tax deposits.

The Appellant contended that they had paid taxes regularly until the Bank refused further payments due to the lack of a PAN-based registration number. They argued that the Partner's lack of education led to a misunderstanding of legal obligations, resulting in unintentional defaults. The Appellant emphasized the absence of deliberate default or malice, as evident from the show-cause notice and subsequent actions to rectify the situation. The Appellant sought a waiver of the imposed penalties.

The Revenue supported the impugned order and requested the dismissal of the appeal. However, upon reviewing the arguments, the Tribunal found no evidence of deliberate default or contumacious conduct by the Appellant. Notably, the Appellant had promptly paid the outstanding tax amount before the show-cause notice was issued, indicating a lack of intentional wrongdoing. Consequently, the Tribunal set aside the penalties imposed under Sections 77, 78 & 70 (1) read with Rule 7 (C) of the Service Tax Rules, 1994, and allowed the appeal in favor of the Appellant.

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