2008 (11) TMI 162 - AT - Service Tax

Appellant is engaged in providing manpower supply agency service which became taxable w.e.f. 16-6-05 - there is delay in obtaining service tax registration and also in payment of service tax. Therefore in any case, the interest for the period of delay in paying the service tax is required to be paid. As regards, the appellant s plea that delay in payment of service tax was on account of their ignorance of law as for this reason no penalty is imposable, this plea can be examined at the time of regular hearing only - stay partly granted

Summary

Issues: Application for waiver of pre-deposit of interest on service tax and penalties imposed by the impugned order.

Analysis:
1. The appellant, engaged in providing manpower supply agency service, applied for service tax registration after the service became taxable, resulting in a delay. The impugned order demanded interest on the service tax for the delay period and imposed penalties under Sections 46 and 77 of the Finance Act for late submission of returns and failure to obtain timely registration.

2. The appellant's counsel argued that the delay in obtaining service tax registration was due to lack of awareness about the taxable status of the service. He requested a waiver of penalties, contending that the appellant voluntarily registered for service tax and paid the tax upon realization of the obligation.

3. The departmental representative opposed the waiver, emphasizing the necessity of paying interest for the delay and supporting the penalties imposed by the Commissioner's order.

4. The Tribunal acknowledged the delay in registration and tax payment, concluding that interest for the delay must be paid. The plea of ignorance of the law as a reason for penalty waiver was deferred for consideration during the regular hearing. The appellant was directed to pay the entire interest amount within four weeks to waive the pre-deposit requirement for penalties, with recovery stayed upon compliance.

This judgment highlights the importance of timely compliance with tax obligations, even in cases of inadvertent delays due to lack of awareness. The Tribunal's decision to uphold the interest payment while deferring the penalty waiver consideration underscores the legal requirement for prompt adherence to tax laws, with penalties subject to further review during regular proceedings.