2017 (12) TMI 1500 - AT - Service Tax

Tax collected but not paid - Advertising Agency Services - penalty u/s 77 and 78 - Held that - the service tax was collected by the appellant from its customers and has not been deposited in the Government account. Further there are no justifiable reason for not depositing the service tax in the Government account - appellant paid the service tax along with interest only after it was detected by the Department - penalty upheld - appeal dismissed - decided against appellant.

Summary

Issues Involved:
Appeal against rejection of appeal by Commissioner(Appeals) - Imposition of penalty under Sections 77 and 78 of the Finance Act, 1994 - Allegation of suppression of fact with intent to evade payment of service tax - Appellant's submission based on judicial precedents - Defense by the Respondent - Applicability of judicial precedents - Failure to remit service tax collected to Government account - Justifiability of penalty imposition under Section 78.

Analysis:
The appeal was directed against the impugned order passed by the Commissioner(Appeals) rejecting the appellant's appeal. The appellant, registered for "Advertising Agency Services," failed to remit the service tax collected to the Government account for a specific period, leading to the issuance of a show-cause notice. The original authority confirmed the demand of service tax, interest, and imposed penalties under Sections 77 and 78 of the Finance Act, 1994. The appellant contended that the penalties were not sustainable as per judicial precedents and that the show-cause notice should not have been issued since dues were paid before its issuance, citing Section 73(3) of the Act. The appellant also argued the absence of specific allegations of suppression of fact. Conversely, the Respondent argued that failure to remit collected service tax amounted to suppression with intent to evade payment, justifying penalties under Sections 77 and 78. The Respondent relied on specific decisions to support their stance.

The Tribunal considered submissions from both parties, reviewed the records, and analyzed the judicial precedents cited. It was noted that the service tax was collected by the appellant but not deposited in the Government account, without any justifiable reason. The appellant paid the tax only after detection by the Department. The Tribunal found no merit in the appellant's reliance on previous decisions, highlighting the distinction that in this case, service tax was collected but not remitted, unlike the cases cited. Consequently, the Tribunal upheld the impugned order, dismissing the appellant's appeal. The decision was based on the failure to deposit collected service tax, lack of justifiable reason for non-payment, and the distinction from the precedents cited by the appellant.

In conclusion, the Tribunal upheld the penalties imposed under Sections 77 and 78 of the Finance Act, 1994, based on the appellant's failure to remit collected service tax to the Government account, despite arguments invoking judicial precedents. The decision emphasized the importance of complying with tax remittance obligations and the consequences of non-compliance, as evidenced by the dismissal of the appellant's appeal.