2017 (9) TMI 1321 - AT - Service Tax

Penalty u/s 76 - Belated payment of tax - payment of 50% of interest liability - mandap keeper service - Held that - there was a reasonable cause for the failure on the part of the appellant to have discharged the tax liability in time and instead pay up the same with delay - the provisions of section 80 ibid, as it was in force during the relevant period, can be invoked in their case and accordingly, there is a case for complete waiver of the penalty imposed under section 76 ibid - demand of balance 50% interest upheld - appeal allowed - decided partly in favor of appellant.

Summary

Issues:
1. Delayed payment of service tax by a charitable trust.
2. Demand for service tax, interest, and penalty under section 76 of the Finance Act, 1994.
3. Appeal against the order confirming service tax liability, interest liability, and penalty.
4. Invocation of section 80 of the Finance Act, 1994 for waiver of penalty.
5. Adjudication of penalty imposition under section 76.

Analysis:
1. The appellant, a charitable trust registered as a service provider for mandap keeper service, faced proceedings due to belated payments of service tax amounting to ?4,23,948/-. The original authority confirmed the service tax liability, interest liability of ?4,23,000/-, and imposed a penalty of ?17,91,612 under section 76 of the Finance Act, 1994.

2. The appellant, represented by an advocate, argued that despite delayed payments, they had paid the entire tax liability before the show cause notice was issued, with 50% of the interest liability also paid. Financial difficulties and the sudden departure of their Chartered Accountant were cited as reasons for the delay. The appellant sought a waiver of the penalty under section 76 by invoking section 80 of the Finance Act, 1994.

3. The respondent contended that the appellant had collected the tax but failed to deposit it within the prescribed period. The penalty calculation was based on ?100/- per day up to a certain date and ?200/- per day thereafter.

4. After hearing both sides, the Tribunal acknowledged the delayed payment by the appellant despite collecting the tax. However, it noted that the entire tax liability was paid before the show cause notice, with the remaining interest paid before the adjudication proceedings concluded. The Tribunal considered the appellant's charitable nature, financial difficulties, and lack of intent to evade tax.

5. The Tribunal found the reasons for the delay reasonable and held that there was no suppression of facts or intent to evade payment. It concluded that section 80 of the Finance Act, 1994 could be invoked for a complete waiver of the penalty imposed under section 76. Consequently, the penalty under section 76 was set aside without affecting other parts of the impugned order.

6. The appeal was partly allowed, granting relief to the appellant by waiving the penalty under section 76 while upholding other aspects of the order.