2016 (12) TMI 1063 - AT - Service Tax

Imposition of penalty - Business Exhibition Service - demand on the ground that certain transactions were left out of consideration and service tax liability was not calculated in respect of the same - Held that - the decision of the Tribunal in the case of ZAK Trade Fairs & Exhibitions Pvt. Ltd. Vs. CST, Chennai 2008 (5) TMI 80 - CESTAT, CHENNAI has appreciated identical situation and has observed that the assessee having acted on account of inadvertent mistake of accountant, the imposition of penalty upon the assessee was not justified - when the consideration of service tax in respect of which no service tax liability discharged was shown in the returns, there could be no mala fide on their part so as to evade the payment of service tax - penalty set aside - decided in favor of assessee.

Summary

Issues: Penalty imposition under Section 76 of the Finance Act, 1994

Analysis:

1. The appeal challenged the penalty imposition of ?1,55,600 on the appellant under Section 76 of the Finance Act, 1994. The appellant provided Business Exhibition Service (BES), was registered with the Service Tax Department, and discharged their service tax liability. However, certain transactions in January 2008 were overlooked, leading to a discrepancy in service tax calculation for that period.

2. Initially, a service tax demand for October 2007 to March 2008 was raised, which was later reduced by the authorities due to the transactions in January 2008. The appellant had already paid ?1,75,994, and the challenge was specifically against the penalty.

3. The mistake in service tax calculation was attributed to an inadvertent error by the person operating the computer system. The appellant contended that the entire consideration, including service tax, was reflected in their returns, indicating no mala fide intent to evade tax. The appellant argued that the underpayment was due to an accounting mistake and not deliberate evasion.

4. The Tribunal cited a previous case where a similar inadvertent mistake by an accountant led to the imposition of a penalty being deemed unjustified. The Tribunal agreed with the appellant's argument that since the consideration subject to service tax was correctly reported in their returns, there was no intention to evade tax. Relying on this precedent, the Tribunal set aside the penalty imposed on the appellant.

5. Ultimately, the Tribunal held that the penalty imposed on the appellant was not justified based on the circumstances of the case. The appeal was disposed of in favor of the appellant, and the penalty was set aside accordingly.

This detailed analysis of the judgment highlights the key issues, arguments presented, legal precedents cited, and the final decision rendered by the Tribunal regarding the imposition of a penalty under Section 76 of the Finance Act, 1994.