2017 (4) TMI 806 - AT - Service Tax

Imposition of penalty u/s 76 - appellant have paid Service Tax during the period December, 2006 to September, 2007, after delay of some days from the due date wherein from 01 day to 230 days - Held that - there is no deliberate default or contumacious conduct on the part of the appellant. Rather the appellant have deposited almost 4 times the actual tax levy with the revenue and such excess amount, remained with the revenue, for substantial time before being adjusted in the subsequent return periods - for some and/or minor failure on the part of the appellant in depositing the tax on or before the due dates, penalty u/s 76 is not exigible - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Imposition of penalty under section 76 for delayed payment of Service Tax.

Analysis:
The appellant, a manufacturer of sugar and molasses, paid Service Tax on reverse charge basis for GTA Services received but failed to claim abatement resulting in overpayment of Service Tax. The show cause notice alleged delayed payment of Service Tax from December 2006 to September 2007, proposing a penalty of ?6,90,157. The Order-In-Original confirmed the penalty under Section 76, leading to the appellant's appeal before the Commissioner (Appeals) and subsequently to the Tribunal.

The appellant argued that they had paid three times the actual liability due to oversight in claiming abatement. The counsel presented returns and charts showing excess payment of Service Tax, which was later adjusted in subsequent return periods. The appellant contended that the penalty under Section 76 was unwarranted due to the substantial overpayment made, indicating no deliberate default or contumacious conduct.

On the other hand, the revenue argued that the excess payment was not reflected in the returns, justifying the imposition of the penalty under Section 76. After considering the contentions, the Tribunal found no deliberate default on the appellant's part. The Tribunal noted that the appellant had deposited almost four times the actual tax levy, which remained with the revenue for a considerable period before adjustment. Citing the Hindustan Steel Ltd. case, the Tribunal held that penalty for minor failures should not be imposed, even if the law allows for it.

Consequently, the Tribunal allowed the appeal, setting aside the impugned order and ruling that the penalty under Section 76 was not exigible due to the circumstances of the case and the substantial overpayment made by the appellant.