2017 (2) TMI 575 - AT - Service Tax

Imposition of penalty u/s 76 of the FA, 1994 - delayed payment of tax - financial difficulty - invocation of section 80 - Held that - with effect from 01.04.2011 the appellant has been discharging the service tax liability on accrual basis and before that it was on receipt basis - it is a fit case to invoke Section 80 and grant the waiver of penalty imposed u/s 76 of FA, 1994, looking at the financial difficulty of appellant - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against penalty under section 76 of the Finance Act, 1994.

Analysis:
1. The appellant filed an appeal against the penalty imposed by the Commissioner (Appeals) under section 76 of the Finance Act, 1994. The delay in paying service tax for specific periods was acknowledged, even though the returns were filed on time. The appellant reflected the unpaid service tax liability in the returns, leading to a show cause notice proposing penalty for the failure to discharge the liability. The original authority upheld the penalty, prompting the appeal to the Tribunal.

2. The appellant's counsel argued financial hardship as the reason for non-payment of service tax during the relevant period. The appellant provided balance sheets showing substantial losses and defaults on loans from financial institutions. Despite requesting a penalty waiver under section 80, the appellant's financial difficulties were not considered sufficient by the Commissioner. Notably, the appellant started discharging service tax on accrual basis from 01.04.2011, previously on a receipt basis. The Tribunal had previously considered the appellant's financial challenges in a prior case and set aside the penalty, citing relevant legal precedents.

3. The Tribunal, after considering submissions from both sides, observed that the appellant's financial hardships were significant. Referring to past judgments and legal principles, the Tribunal found it appropriate to invoke Section 80 of the Finance Act, granting a waiver of the penalty imposed under Section 76. Relying on precedents like Ramnasekar Steels Ltd., Vs CCE, Chennai and Ralson Carbon Black Ltd., Vs. CCE, Chandigarh-I, the Tribunal set aside the penalty and allowed the appeal with any necessary consequential reliefs. The decision was pronounced and dictated in open court, providing relief to the appellant.