2009 (10) TMI 26 - AT - Service Tax

Delay in payment of service tax penalty chartered accountancy firm - held that - reasons explained for delay in payment of service tax are reasonable since the work of filing returns and paying tax etc. are often left to junior staff by the assessee and such mistakes can happen - Chartered Accountant is supposed to know the law and in fact advise others penalty imposed u/s 77 for late filing of return upheld penalty imposed u/s 76 set aside.

Summary

Issues:
1. Failure to file service tax returns for a specific period.
2. Delay in payment of service tax for multiple quarters.
3. Imposition of penalties under Section 76 and Section 77 of the Finance Act, 1994.
4. Request for waiver of penalties based on reasonable cause.

Analysis:
1. The appellant, engaged in providing services as a Practicing Chartered Accountant, was found to have not filed service tax returns for six months ending in September 2006. Additionally, the appellant failed to pay service tax within the due dates for three quarters - June 2005, September 2005, and December 2005. A show cause notice was issued, and penalties were imposed under Section 76 and Section 77 of the Finance Act, 1994.

2. The appellant's consultant explained that the delay in payment of service tax was due to confusion regarding the changed due date from 25th to 5th, leading to inadvertent delays. However, the reasons for not filing the return for the quarter ending in September 2005 were not adequately explained. The consultant argued for the waiver of penalties under Section 80, citing the appellant's eligibility for exemption based on the value of services provided.

3. The respondent, represented by the SDR, contended that as a Chartered Accountant, the appellant should have been aware of the legal provisions and provided proper advice, negating any reasonable cause for penalty waiver.

4. The Member (Technical) considered the submissions and found the reasons for the delay in payment of service tax to be reasonable, attributing such errors to junior staff handling compliance tasks. Consequently, the appellant demonstrated a reasonable cause for the waiver of penalty under Section 76. However, acknowledging the appellant's professional role and responsibility to know and advise on legal matters, the penalty imposed under Section 77 was upheld. The appeal was allowed, setting aside the penalty under Section 76 while upholding the penalty of Rs. 2,000 under Section 77.

This detailed analysis of the judgment addresses the issues of failure to file service tax returns, delay in payment of service tax, imposition of penalties, and the request for penalty waiver, providing a comprehensive understanding of the legal proceedings and the final decision rendered by the Appellate Tribunal CESTAT AHMEDABAD.