2009 (4) TMI 139 - AT - Service Tax

Penalty Waiver held that - It is seen that the appellants provided security services to M/s. BSNL. They have shown the sole reason behind the delay in payment of service tax has been the extraordinary delay in payment of their security bills by M/s. BSNL Ernakulam. It is seen that M/s. BSNL had withheld the payment from 2 to 3 months over a sustained period of 4 years. On account of BSNL s delay the appellant also had to pay a huge amount of interest. It is also seen that the appellant s company is run by a retired defence officer. penalty waived

Summary

Issues:
- Short payment of service tax
- Delay in payment of service tax
- Imposition of penalty

Short Payment of Service Tax:
The appellants were engaged in providing 'security agency service' and had paid service tax of Rs. 5,21,468 for the period from 1-4-2005 to 30-9-2005. However, upon scrutiny, it was found that the actual amount payable was Rs. 7,25,033, resulting in a short payment of Rs. 2,03,565. Additionally, the appellants had not paid service tax on time for the period from April 2005 to September 2005. This led to the initiation of proceedings through a show-cause notice. The Original authority confirmed the demand of service tax along with interest, which the appellants paid subsequently. The Commissioner (Appeals) confirmed a penalty of Rs. 96,973 for the amount not paid before the show-cause notice was issued.

Delay in Payment of Service Tax:
The delay in payment of service tax was attributed to the delay in receiving payments from the service recipient, M/s. BSNL. The appellants argued that they promptly paid the service tax as soon as they received payments from BSNL. The delay was explained by the unpaid bills from BSNL, causing a delay in the appellants' ability to pay the service tax on time. The appellants cited various case laws to support their argument that there was a reasonable cause for the delay in payment.

Imposition of Penalty:
The appellants contested the imposition of a penalty, emphasizing that the delay in payment was solely due to the delayed payments from M/s. BSNL, a Public Sector Enterprise. It was highlighted that the delay in payments by BSNL had led to the accrual of a significant amount of interest for the appellants. The appellants' company being managed by a retired defence officer was also mentioned. Upon review, the Tribunal found merit in the appeal and decided to set aside the penalty imposed on the appellants under section 80 of the Finance Act, considering the circumstances and the delay caused by BSNL.

In conclusion, the Tribunal ruled in favor of the appellants, waiving the penalty imposed on them due to the delay in payment of service tax, attributing the delay to the prolonged delay in payments from the service recipient, M/s. BSNL.