2019 (9) TMI 1551 - AT - Service Tax

Levy of penalty - Non-payment of service tax - service tax alongwith interest paid on being pointed out - Intellectual Property Service - HELD THAT - The appellant assessee has already deposited the entire disputed service tax of 80, 944/- and interest of 16, 605/- on 10.12.2010 and the same has also been appropriated by the adjudicating authority. It is deemed appropriate to invoke the provision of Section 80 in respect of the penalties imposed - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Demand of service tax under the category of "Intellectual Property Service" for the period from May 2005 to February 2007.
2. Imposition of penalties under Section 77 and Section 78 of the Finance Act, 1994.
3. Appeal against the adjudication order upheld by the Ld. Commissioner (Appeals).

Analysis:

1. The appellant, engaged in manufacturing Cable Reeling Drum and Magnetic Separator, faced a Show Cause Notice for non-payment of service tax under "Intellectual Property Service" for the period from May 2005 to February 2007. The Adjudicating Authority confirmed a demand of ?80,944/- with interest of ?16,605/-. The penalties imposed were ?1,61,888/- under Section 78 and ?5,000/- under Section 77.

2. The Ld. Commissioner (Appeals) upheld the adjudication order and penalties, leading to the appeal before the Tribunal. The appellant, through their Chartered Accountant, argued that they had paid substantial fees towards technical know-how to foreign collaborators and that the penalty under Section 78 was arbitrary and excessive. The Departmental Representative supported the impugned orders.

3. After hearing both sides and reviewing the records, the Tribunal noted that the appellant had already paid the disputed service tax and interest in full, which was also appropriated by the adjudicating authority. Consequently, invoking Section 80, the Tribunal set aside the penalties imposed under Sections 77 and 78 of the Finance Act, 1994. The appeal by the appellant was allowed on these grounds.

This judgment highlights the importance of compliance with service tax obligations and the repercussions of non-payment. It also underscores the significance of thorough documentation and timely payment to avoid penalties. The Tribunal's decision to set aside the penalties showcases the application of relevant legal provisions to ensure fairness in tax disputes.