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2008 (9) TMI 121 - AT - Service TaxAllegation that the applicants were collecting Service Tax, but not depositing in the account of the Government - applicant had collected the service tax but not deposited into the Govt. account and they have not pleaded any financial hardship - applicants have not made a prima facie case for complete waiver of pre-deposit of amount of service tax confirmed and penalty imposed stay cannot be granted
Issues: Stay application for waiver of pre-deposit of Service Tax liability and penalty.
Analysis: 1. The applicants were engaged in event management, sales promotion, brand promotion, and advertisement services through internet and mobile services. The show cause notice alleged non-discharge of Service Tax liability amounting to Rs. 66,02,374. The record showed that the applicants collected Rs. 59,91,371 as Service Tax but did not deposit it with the Government due to financial difficulty. During the investigation, they deposited Rs. 54,63,548. The Tribunal noted the absence of a justifiable reason for non-depositing the Service Tax collected from customers. 2. The Tribunal observed that the applicants failed to establish a prima facie case for a complete waiver of pre-deposit of the confirmed Service Tax and penalty. Considering that the applicants collected but did not deposit the Service Tax and did not cite financial hardship, the Tribunal directed them to deposit Rs. 20 lakhs within eight weeks. This deposit was in addition to the balance amount of Service Tax collected but not deposited. Upon compliance, the pre-deposit of the remaining penalty amount would be waived, and recovery stayed pending appeal disposal. This judgment highlights the importance of complying with Service Tax obligations and the Tribunal's discretion in determining pre-deposit requirements based on the circumstances presented by the applicants. The decision underscores the need for justifiable reasons for non-compliance and the consequences of failing to meet Service Tax obligations despite collecting the tax from customers.
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