2009 (3) TMI 83 - AT - Service Tax

Benefit of Section 80 of the Finance Act 1994 penalty - Health Club and Fitness Centre - Ignorance of law cannot be accepted as a reasonable cause for failure to pay service tax - when they paid service tax with interest they were aware of the penal provisions also- this awareness of law is further evidenced by the fact that they paid all the penalties imposed on them by the Assistant Commissioner moreover appellant did not choose to claim the benefit of Section 80 in answer to the SCN issued by the Assistant Commissioner held that appellant is not entitled to the benefit of Section 80

Summary

Issues:
1. Imposition of penalties under Sections 75A, 76, 77, and 78 of the Finance Act, 1994 on the assessee.
2. Review of the Assistant Commissioner's decision under Section 76 and imposition of penalty by the Commissioner.
3. Applicability of Section 80 of the Finance Act, 1994 in setting aside the imposed penalty under Section 76.

Analysis:

Issue 1:
The Assistant Commissioner proposed penalties on the assessee under various sections for failures related to registration, payment of service tax, filing returns, and suppressing taxable service value. The assessee obtained registration post the show-cause notice, and penalties were imposed and paid accordingly.

Issue 2:
The Commissioner issued a show-cause notice to review the decision under Section 76 and imposed a penalty equal to the service tax amount. The assessee contested this penalty, leading to the present appeal challenging the penalty imposition.

Issue 3:
The assessee sought to set aside the penalty under Section 80 of the Finance Act, 1994, citing ignorance of service tax liability at the material time. However, ignorance of law cannot justify failure to pay service tax, especially when the levy was announced in advance, and the assessee paid all penalties imposed by the Assistant Commissioner without claiming the benefit of Section 80.

The Tribunal noted a discrepancy in the registration category mentioned by the authorities and the appellants. Despite this, the assessee accepted the category mentioned in the order, leading to the conclusion that the payment was accepted by the Department. The Tribunal held that the appellants were aware of the penal provisions, as evidenced by paying all penalties without claiming Section 80 benefits. Consequently, the Tribunal ruled that the appellants were not entitled to the benefit of Section 80 and upheld the penalty imposed by the Commissioner under Section 76.

In conclusion, the Tribunal dismissed the appeal, affirming the liability of the appellants to pay the penalty imposed by the Commissioner under Section 76 of the Finance Act, 1994.