2017 (5) TMI 651 - AT - Service Tax

Imposition of penalties u/s 77 (2) and 78 of the FA, 1994 - non-payment of service tax with interest - the case of appellant is that the law was not very clear during the period in dispute - Held that - the appellant has not made out any case against the imposition of the penalties, in as much, he has not brought on record to what was the justifiable reasons for him to not to discharge the service tax liability after taking the registration from the department - On the limitation also, it is noticed that appellant has not been able to justify non-filing of returns with the department or informing the department as to the tax liability that arose, which was not discharged - appeal dismissed - decided against appellant.

Summary

Issues:
- Appellant contesting penalties imposed
- Justifiability of penalties in case of non-discharge of service tax liability
- Lack of clarity in law during the disputed period

Analysis:
1. The appeal was filed against an Order-in-Appeal dated 17.06.2015, where the appellant, a Manpower Recruitment and Supply Agency Services provider, was found to have not discharged the service tax liability for the period November 2008 to December 2011 despite being registered with the authorities since 17.12.2008. The authorities issued a show cause notice demanding the service tax liability, interest, and penalties under Section 77(2) and Section 78 of the Finance Act, 1994. Both the adjudicating authority and the first appellate authority upheld the demand. The appellant contested the penalties imposed, claiming lack of clarity in the law during the disputed period and unjust imposition of penalties without allegations of suppression of facts.

2. The appellant's argument centered on the lack of clarity in the law during the relevant period, asserting that the penalties imposed were unjust as there was no allegation of suppression of facts. However, the tribunal found that the appellant failed to provide justifiable reasons for not discharging the service tax liability despite being registered. The appellant did not demonstrate why returns were not filed or why the tax liability was not informed to the department. The tribunal noted the absence of any valid justification presented by the appellant for non-compliance with the tax obligations.

3. Upon thorough review, the tribunal concluded that the penalties imposed were justified, as the appellant failed to establish a valid case against their imposition. The tribunal found that the impugned order was legally sound and free from any defects. Consequently, the appeal was rejected, affirming the decision to uphold the demand for service tax liability, interest, and penalties. The tribunal's decision was based on the appellant's failure to provide sufficient justification for non-compliance with the tax obligations, despite being registered with the authorities.