2017 (10) TMI 1442 - AT - Service Tax

Imposition of penalty - amount of service tax along with interest stands deposited by the appellant - Business Auxiliary Service - Held that - The Commissioner (Appeals) observed that the service tax was actually paid on 14-6-2011. The interest was paid on 18-4-2013. The Commissioner (Appeals) observed that there is a long delay in payment of interest and therefore, Section 78 may be invoked - the findings of the Commissioner (Appeals) cannot be accepted for the reason that the delay in payment of interest cannot be construed as suppression of facts with intent to evade payment of tax. Therefore, the impugned order by the Commissioner (Appeals) cannot be sustained. The order passed by the adjudicating authority is upheld. The order of the Commissioner (Appeals) is set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Alleged failure to pay service tax under reverse charge mechanism
- Appropriation of service tax along with interest by adjudicating authority
- Imposition of penalty under Section 78 of the Finance Act, 1994
- Appeal against Order-in-Appeal No. 2/ST/HAL/2017

Analysis:

The appellant filed an appeal against Order-in-Appeal No. 2/ST/HAL/2017, alleging that they failed to pay service tax for services provided by a foreign company under the reverse charge mechanism. The adjudicating authority had already appropriated the service tax amount along with interest paid by the appellant, refraining from imposing a penalty under Section 78 of the Finance Act, 1994, citing Section 80 of the Act. The Revenue appealed to the Commissioner (Appeals), who directed the original authority to reevaluate and consider imposing the penalty under Section 78.

Upon hearing both sides and examining the records, the Member (J) noted that the service tax was paid on 14-6-2011, with interest paid on 18-4-2013. The Commissioner (Appeals) highlighted the delay in interest payment as a basis for invoking Section 78. However, the Member (J) disagreed, stating that a delay in interest payment does not necessarily indicate an intent to evade tax. Consequently, the Member (J) held that the Commissioner (Appeals)'s decision was not justified and set it aside.

In conclusion, the order of the adjudicating authority was upheld, and the Commissioner (Appeals)'s decision was overturned. The appeal filed by the appellant was allowed, with the operative part of the order pronounced in open court.