2008 (9) TMI 206 - AT - Service Tax

Tax paid on verification by department - Services of commissioner agent service tax not paid on ground that money has not been received from recipient when officers verified and found that the amount had been received on 29th March, 2006 and when this was pointed out, the service tax was paid and the reason given for delayed payment was financial difficulty - no evidence has been put forth to prove financial difficulty stay not granted completely

Summary

Issues:
1. Service tax liability for services provided as a commission agent in 2005-2006.
2. Delay in payment of service tax due to financial difficulty.
3. Benefit of cum-tax-invoice value not extended to the appellant.
4. Imposition of penalty under Section 78 of the Finance Act, 1994.

Analysis:

1. The appellant had rendered services as a commission agent in 2005-2006 valued at Rs. 1,22,50,000/- without paying the service tax. The Department initiated investigations and upon enquiring with the Managing Director, it was revealed that the service was provided in 2005-06, but the money had not been received, leading to non-payment of service tax. However, subsequent verification showed that the amount was received on 29th March, 2006. The appellant then paid the service tax, citing financial difficulty as the reason for the delay.

2. The appellant's Consultant argued that the benefit of cum-tax-invoice value was not extended to them. The Managing Director claimed they were unaware of the receipt of the amount when questioned by officers. The Consultant highlighted that the appellant, a registered firm, primarily dealt with transport services and this commission agent service was a one-time occurrence. Additionally, the Consultant mentioned the poor financial position of the company but failed to provide supporting evidence.

3. Considering the circumstances, the Tribunal directed the appellant to deposit Rs. 3 lakhs out of the penalty of Rs. 12,49,500/- imposed under Section 78 of the Finance Act, 1994 within eight weeks. Upon this deposit, the requirement for pre-deposit of the remaining penalty amount was waived, and recovery was stayed until the appeal's disposal. The appellant was instructed to report compliance by a specified date.

This judgment addresses the service tax liability, the delay in payment due to financial constraints, the issue of cum-tax-invoice value benefit, and the imposition of penalty under the Finance Act, 1994. The Tribunal balanced the circumstances by allowing a partial deposit to waive the pre-deposit requirement, considering the appellant's financial difficulty while emphasizing compliance with the penalty payment.