2017 (3) TMI 469 - AT - Service Tax

Recovery of late fee u/s 70 of the FA, 1994 read with Rule 7C of the Rules - imposition of penalty u/s 77 (2) ibid - appellant claims that is a semi-literate provider providing manpower service and as such the actual submission per se remained to be done inadvertently - Held that - appellant had finished filing of he returns upto the stage of Save status. However, electronic-submission thereof was effected only on 26.4.2013 - e-filing status of the appellant is non-intentional and simply it is ignorance of their part. It is also not disputed that in the initial stages of the ACES implementation even established assesees with sufficient infrastructure were facing problems of e-filing returns etc. due to teething problems - returns had been prepared in the system but, only not submitted, demand cannot be raised - appeal allowed - decided in favor of appellant.

Summary

Issues: Recovery of late fee and penalty under Section 70 and Section 77 (2) of the Finance Act, 1994 for the periods April 2011 to September 2011 and October 2011 to March 2012.

Analysis:
1. Late Fee and Penalty Imposition for April 2011 to September 2011:
The issue in appeal concerned the recovery of a late fee of ?20,000 and a penalty of ?2,000 under Section 70 of the Finance Act, 1994 for the period April 2011 to September 2011. The original authority had confirmed the imposition of the late fee and penalty. However, on appeal, the Commissioner (Appeals) allowed the appeal for this period, citing technical difficulties faced by the appellant while e-filing their ST-3 Return. The Commissioner observed that the appellant had finished filing the return up to the 'Save' stage, but due to a common problem in the system, they were unable to submit it on time. The Commissioner noted that the appellant's non-submission was unintentional and due to ignorance, especially considering the challenges faced during the initial stages of ACES implementation. Consequently, the late fee and penalty for this period were set aside, providing consequential relief.

2. Late Fee and Penalty Imposition for October 2011 to March 2012:
For the period of October 2011 to March 2012, the appeal filed by the appellant was rejected, and the original authority's order was upheld. The appellant's counsel argued that since a part of the earlier period had been allowed by the Commissioner (Appeals) based on the same grounds of technical difficulties, the appeal for this period should have been similarly allowed. The counsel highlighted that the returns were prepared in the system but not submitted due to inadvertence, especially given the appellant's status as a semi-literate service provider. After hearing both sides, the Tribunal noted that the appellant had indeed finished filing the returns up to the 'Save' status but only electronically submitted them on a later date. Considering the challenges faced during the initial ACES implementation and the appellant's circumstances, the Tribunal held that the recovery of late fee and penalty for this period was not warranted. Therefore, the late fee under Section 70 of the Act along with the penalty under Rule 77 (2) was set aside for this period as well, granting any consequential relief as per law.

In conclusion, the Tribunal allowed the appeal, setting aside the recovery of late fee and penalty for both the periods of April 2011 to September 2011 and October 2011 to March 2012, based on the grounds of technical difficulties faced by the appellant and the unintentional nature of the non-submission of returns.