2016 (5) TMI 899 - AT - Service Tax

Waiver of penalty imposed under Section 78 of the Finance Act, 1994 and late fee - Section 80 ibid - Commercial Construction service - Delayed payment of Service tax - Held that - the appellant is not a regular defaulter on payment of service tax. The liability arose only due to crossing the exemption limit of ₹ 10lakhs in the year 2011-12 and prior to that the appellant was working under exemption being the turnover remained below ₹ 10 lakhs. Therefore, no mala fide intention found on the part of the appellant. Moreover, the appellant, immediately after pointing out by the department regarding non-payment of service tax, discharged the service tax along with interest before issuance of show cause notice. Therefore, the appellant is clearly entitled for the immunity provided under Section 73(3) of the Finance Act, 1994. The appellant has also made out a case for waiver of penalty in terms of Section 80 of the Finance Act, 1994, therefore the penalty imposed under Section 78 of the Finance Act, 1994 is waived of. The order of the Learned Commissioner on the issue of late fee is maintained. - Decided partly in favour of appellant

Summary

Issues:
Imposition of penalty under Section 78 and late fee.

Analysis:
The appeal challenged the Order-in-Appeal maintaining the penalty under Section 78 and late fee imposed by the original adjudicating authority. The appellant provided taxable services to two entities, crossing the turnover limit in 2011-12, resulting in a service tax liability of Rs. 1,82,602 along with interest. The Commissioner upheld the demand of service tax and penalty under Section 78 but kept the late fee in abeyance until returns were filed. The appellant contended that the show cause notice should not have been issued as they promptly paid the service tax and interest upon department notification, citing inadvertence due to turnover crossing the limit in 2011-12.

The appellant's counsel argued no mala fide intent to evade payment, emphasizing the turnover was below the threshold in previous years. The Revenue's representative supported the impugned order's findings. The Member (Judicial) noted the appellant's non-regular defaulter status, attributing the liability solely to exceeding the exemption limit in 2011-12. Acknowledging the immediate payment of service tax upon department notification, the Member found the appellant eligible for immunity under Section 73(3) of the Finance Act, 1994. Considering the circumstances, the Member waived the penalty under Section 78 but maintained the late fee as per the Commissioner's order. The appeal was partly allowed with the penalty waiver and late fee retention.