2017 (1) TMI 1747 - AT - Service Tax

Levy of penalty - service tax alongwith interest paid on being pointed out - services of foreign commission agents - reverse charge mechanism - HELD THAT - In appellant own case of past periods M/S. RSWM LTD. VERSUS CCE, JAIPUR-II 2016 (11) TMI 1363 - CESTAT NEW DELHI is similar issue, Tribunal has set aside the penalty u/s 80. The penalties are set aside under Section 80 - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Challenge against penalties imposed under Sections 76 and 77 of the Finance Act, 1944.
- Applicability of Section 80 for waiver of penalties in the present appeal.

Analysis:

Issue 1: Challenge against Penalties
The appellant, engaged in the manufacture and export of yarn, availed the services of foreign commission agents for selling goods in foreign countries. Penalties were imposed under Sections 76 and 77 of the Finance Act, 1944, for the period July 2008 to December 2008 on a reverse charge basis. The appellant did not contest the levy of service tax and payment of interest but sought the waiver of penalties. The Tribunal considered the appellant's submission and previous Tribunal orders where penalties were waived in similar cases. The Tribunal noted that the appellant had promptly deposited the dues after the law was clarified by the Bombay High Court, indicating no malafide intent. Consequently, the Tribunal set aside the penalties imposed under Sections 76 and 77 of the Finance Act, 1944.

Issue 2: Applicability of Section 80 for Waiver of Penalties
The appellant's counsel argued for the waiver of penalties by invoking Section 80 of the Finance Act, 1944, citing previous Tribunal orders where penalties were waived for the same appellant in similar disputes for earlier periods. The Tribunal, in line with its previous decisions, held that in the absence of any malafide on the part of the appellant and considering the timely payment of dues after the law clarification by the Bombay High Court, the imposition of penalties was not justifiable. Relying on the benefit extended under Section 80 for the same assessee in previous disputes, the Tribunal set aside the penalties under Section 80 and allowed the appeal. The demand for tax and interest, which was not contested, stood confirmed.

In conclusion, the Tribunal allowed the appeal, setting aside the penalties imposed under Sections 76 and 77 of the Finance Act, 1944, by invoking the provisions of Section 80 based on previous Tribunal orders and the appellant's compliance with the law after its clarification by the Bombay High Court.