2017 (11) TMI 246 - AT - Service Tax

Penalty u/s 70 of Finance Act, 1994 read with Rule 73 of STR 2004 - failure in filing the service tax return in time - Held that - perusal of provisions of section 70 of the Finance Act, 1994, prior to its amendment and after the amendment effective from 08.04.2011, I find that with regard to six returns the appellant is liable to pay ₹ 12,000/- penalty at the rate of ₹ 2,000/- per return - the two returns pertaining to the period April 2009 to Sept. 2009 and April 2010 and Sept. 2010 were nil return and therefore, he is not liable to pay any penalty for the nil return. In all maximum penalty which can imposed on the appellant is ₹ 18,000/- and therefore the impugned order imposing the penalty of ₹ 1,80,000/- is wrong and illegal and infact the appellant is liable to pay only ₹ 18,000/- as penalty - appeal allowed in part.

Summary

Issues:
Appeal against imposition of penalty under section 70 of Finance Act, 1994 read with Rule 73 of Service Tax Rule 2004 for failure to file service tax returns on time.

Analysis:
The appellant, registered for transportation of goods by road service, challenged the penalty of ?1,80,000 imposed for not filing service tax returns from 2006-07 to 2011-12. The penalty was calculated at ?20,000 per return for 9 returns. The appellant argued that the penalty was imposed under amended provisions effective from 08.04.2011, while the default period was before this amendment. They cited precedents to support their claim that the maximum penalty before the amendment was ?2,000 per return. The appellant contended that the penalty increase was prospective, not retrospective. The AR supported the impugned order.

Upon review, the Tribunal found the appellant liable for penalties totaling ?18,000, considering ?2,000 per return for six returns and ?6,000 for a specific period. Nil returns were exempt from penalties. The Tribunal deemed the penalty of ?1,80,000 excessive and reduced it to ?18,000. The appellant had already paid ?17,500, and any shortfall would be recovered. The decision was delivered on 27/10/2017.