2017 (12) TMI 1498 - AT - Service Tax

Penalties - non-payment of service tax - Annual Maintenance Contract Services - payment of tax with interest on being pointed out - Held that - the legal issues, during the relevant period, were not very clear, thus, giving doubts to the assesses. In as much as, the services were a part of the appellant s record, there was no escape for the appellant to deposit the Service Tax. In this scenario, no mala-fide intention can be attributed to the assessee so as to attract penal provisions - penalty set aside - appeal allowed.

Summary

Issues involved:
Imposition of penalties for non-payment of Service Tax, availability of credit of Service Tax on Input Services, time bar for the order.

Analysis:
The judgment by the Appellate Tribunal CESTAT ALLAHABAD, delivered by Mrs. Archana Wadhwa, Member (Judicial), addresses the challenge solely concerning the imposition of penalties. The case involves an appellant registered with the Service Tax Department engaged in manufacturing excisable goods, who was found to have provided services under the category of "Annual Maintenance Contract" without paying the corresponding Service Tax. Additionally, the appellant failed to pay Service Tax on time between October 2009 to March 2010, leading to proceedings for recovery of Service Tax, interest, and penalties amounting to ?14,90,358. The Original Adjudicating Authority confirmed the demand and penalties, a decision upheld by the Commissioner (Appeals), prompting the appellant's current appeal.

During the proceedings, the appellant argued that the credit was utilized for Service Tax payment, relying on a Board clarification and contesting the order's time bar issue. It was noted that a short levy occurred, which the appellant rectified by paying the amount along with interest. The Commissioner (Appeals) upheld a penalty on a belatedly debited amount of ?3,53,185, which the appellant claimed to have already paid interest on. The appellant explained the delay in Service Tax deposition was due to late receipt of payments.

The Tribunal recognized the lack of clarity on legal issues during the relevant period, leading to confusion for assesses. Considering the services were recorded by the appellant, the obligation to pay Service Tax was unavoidable. Given the absence of malicious intent on the appellant's part, the Tribunal set aside the penalty, ruling in favor of the appellant. The judgment was pronounced in court on 17.11.2017.