2018 (1) TMI 532 - AT - Service Tax

Penalty - non-payment of service tax - Held that - the reason for setting aside the penalty by the appellate authority is lack of evidence reflecting upon the malafide intention of the respondent. Revenue in their memo of appeal has not produced sufficient evidence to rebut the above finding of the Commissioner(Appeals) - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Setting aside penalty while upholding demand.
2. Lack of evidence reflecting malafide intention.
3. Imposition of late fee under Section 70 of the Finance Act, 1994.

Issue 1: Setting aside penalty while upholding demand
The Revenue appealed against the part of the order where the penalty on the respondents was set aside while the demand was confirmed. The appellate authority set aside the penalty imposed by the original adjudicating authority, stating that although there was a default in tax payment, it was not intentional. The appellant faced financial difficulties due to market conditions and had reflected the facts in their balance sheets. The delay in tax payment was considered reflective of lack of promptitude rather than deliberate evasion. The appellate authority found the appellants' actions to be bona fide, leading to non-payment of taxes in time, and set aside the penalty.

Issue 2: Lack of evidence reflecting malafide intention
The appellate authority based its decision on the lack of evidence showing malafide intention on the part of the respondent. The Revenue failed to produce sufficient evidence to rebut this finding. The Commissioner(Appeals) had found that the delay in tax payment was not evidence of intention to evade tax, especially considering the financial difficulties faced by the appellants. As a result, the Tribunal found no reason to interfere with the decision and rejected the appeal filed by the Revenue.

Issue 3: Imposition of late fee under Section 70 of the Finance Act, 1994
Regarding the imposition of late fees for failure to file ST-3 returns on time, the Tribunal referred to a similar case and held that only one penalty is imposable for all contraventions of non-filing of returns. The Tribunal decided that a penalty of ?20,000 would suffice instead of the higher amount initially imposed. The decision was based on the principle that separate penalties for each contravention were not warranted in this case, aligning with the judgment in the Anil Products Ltd. case.

In conclusion, the Tribunal upheld the decision to set aside the penalty while confirming the demand, citing lack of evidence of malafide intention on the part of the respondent. The Tribunal also adjusted the late fee imposed for failure to file returns, aligning with precedent to ensure fairness in penalty imposition. The appeal filed by the Revenue was rejected based on these considerations.