2017 (9) TMI 1262 - AT - Service Tax

Penalty waived u/s 78 of FA - invocation of section 80 - delay in payment of service tax - assessee says that the delay was caused due to financial crunch, and later on the tax was paid with interest, thus no malafide intent to evade tax - Held that - there was no intention to evade Service Tax and there were bona fide reasons for not paying the Service Tax in time which was subsequently paid with interest. Therefore, the benefit given by the Commissioner (A) by resorting to section 80 is justified - appeal dismissed - decided against Revenue.

Summary

Issues: Appeal against modified order by Commissioner (A), Cross objections against imposition of late fee.

Analysis:
1. The appeal was filed by the Revenue against the modified order by the Commissioner (A) where the appeal of the Respondent was partially allowed. The Respondent, a Clearing & Forwarding Agent, faced a demand for service tax, interest, penalty, and late fee for delayed payment of taxes. The Assessee paid the taxes up to August 2010 within the stipulated time after facing a cash flow problem. The lower authority confirmed the demand, interest, and imposed a penalty and late fee, which was modified by the Commissioner (A) based on certain Tribunal decisions.

2. The Revenue argued that the penalty should not have been dropped by the Commissioner (A) under section 80 of the Finance Act, 1994, as the Assessee was aware of the law and delayed payment due to financial issues. The Revenue contended that the Assessee suppressed facts by delaying filing ST-3 returns, making them liable for penalty under section 78 of the Finance Act, 1994. The Commissioner (A) disagreed, stating the Assessee did not suppress facts, paid taxes and interest before the show cause notice, and cited various Tribunal decisions in support.

3. The Assessee filed cross objections against the imposition of late fee penalty. The Assessee paid a late fee of &8377; 8,000 for delayed filing, but the original authority imposed a late fee of &8377; 26,000 for multiple periods. The Commissioner (A) did not discuss this but upheld the late fee imposition. The Tribunal found the late fee justified due to delayed filing and upheld the original authority's decision, stating the Assessee must pay the remaining &8377; 18,000. The cross objections were dismissed.

4. The Tribunal upheld the Commissioner (A)'s decision to drop the penalty under section 78 and dismiss the Revenue's appeal. The late fee of &8377; 26,000 was upheld, and the Assessee was directed to pay the remaining amount. Both the Revenue's appeal and the Assessee's cross objections were dismissed, concluding the case.