2019 (5) TMI 1761 - AT - Service Tax

Imposition of penalty u/s 78 of FA - appellant was providing services to the bank at specified rate, and further provided that the bank at its discretion will intimate the amount payable in writing - non-payment of service tax - malafide intent present or not - case of Revenue is that appellant should have taken steps for discharge of their tax obligation and should not have imagined that the bank is taking care of the service tax liability - HELD THAT - There is no contumacious conduct or deliberate contravention of the provisions of law by the appellant, as it appears from the facts on record - In similar circumstances in the case of M/S. KHANDWALA SECURITIES LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-I 2015 (6) TMI 783 - CESTAT MUMBAI , the Tribunal has held that the penalty under Section 78 is not imposable. Penalty under Section 78 of the Finance Act is set aside - appeal allowed in part.

Summary

Issues:
Imposition of penalty under Section 78 of the Finance Act.

Analysis:
The appellant, a Recovery Agent for a bank, was directed to pay service tax for the period 2008-09 to 2012-2013. The appellant deposited the tax with interest upon receiving notice, prior to the show cause notice. The Department imposed penalties under various sections, including Section 78. The Commissioner (Appeals) set aside penalties under Section 77 but confirmed others. The appellant appealed to the Tribunal, arguing lack of mala fide intent and reliance on the bank for tax payment. The appellant cited cases supporting their position. The Revenue contended that the appellant should have ensured tax compliance independently. Both parties cited case laws to support their arguments.

The Tribunal noted that there was no deliberate violation of law by the appellant and that similar cases had led to penalties under Section 78 being set aside. Consequently, the Tribunal allowed the appeal in part, setting aside the penalty under Section 78 of the Finance Act.