2007 (1) TMI 178 - AT - Service Tax

Late payment of tax - imposition of penalty - Extraordinary Tax Payer Friendly Scheme - appellant had discharged the entire service tax liability and interest thereof on 5-1-2004 on his own while Scheme provided the till 30-10-04 - issue is covered by Tribunal s decision in Bharat Securities Services & Workers Cont. where it was held that Scheme was applicable even to the assessees who discharged the service tax before the announcement of the said scheme held that penalties not imposable

Summary

Issues:
Payment of service tax by the appellant as a clearing and forwarding agent, imposition of penalty, waiver of pre-deposit, discharge of service tax liability, imposition of interest, awareness of legal provisions, applicability of penalty under Sections 76 and 77 of the Finance Act, 1994.

Analysis:
The case involves a dispute over the payment of service tax by the appellant for services provided as a clearing and forwarding agent between November 2001 and September 2003. The Revenue contended that the appellant should have registered as a clearing and forwarding agent and paid the service tax liability. Following a show cause notice, the demand was confirmed, and a penalty was imposed along with interest on the appellant.

The appellant's advocate argued that the service tax liability was already discharged on 1-1-2004, including the interest due. He requested leniency and the setting aside of the penalties imposed. In contrast, the SDR representing the Revenue claimed that the appellant had not paid the service tax liability, justifying the penalty. The SDR emphasized that the appellant should have been aware of the legal requirements and registered accordingly.

Upon reviewing the submissions and records, it was established that the appellant had indeed paid the entire service tax liability and interest on 5-1-2004 voluntarily. The show cause notice only directed the appellant to explain why penalties under Sections 76 and 77 of the Finance Act, 1994, should not be imposed. The appellant argued that they were unaware of the legal provisions, leading to non-registration.

The Tribunal referred to a previous case where a taxpayer-friendly scheme was introduced by the department, granting amnesty on penalties for service providers who registered by a specified date. This scheme applied even to those who paid the service tax before the scheme's announcement. Consequently, the Tribunal ruled in favor of the appellant, setting aside the penalty imposed under Sections 76 and 77.

In conclusion, the appeal was partially allowed, with the penalty under Sections 76 and 77 being revoked based on the precedent and the appellant's voluntary payment of the service tax liability and interest.