2009 (3) TMI 192 - AT - Service Tax

Default in payment of tax - services rendered by the appellants viz., Maintenance and Repair Services; Commissioning and Installation services; and Testing and Inspection Certificate Services are not disputed by the appellants. The appellants have obtained the registration in February 2005. The said services came under Service Tax net from 1-7-2003. We find that the information regarding the past transaction i.e., prior to the taking of the registration, was not furnished by the appellants to the authorities - contention of the appellant that they were under bona fide impression, not accepted - Imposition of interest and penalty is justified

Summary

Issues:
- Appellants providing Maintenance & Repair Services, Commissioning & Installation Services, and Testing, Inspection & Certificate Services.
- Delay in obtaining Service Tax registration.
- Non-disclosure of past transactions to the authorities.
- Dispute over imposition of penalties for non-payment of Service Tax.
- Appellants' contention of paying the entire amount of Service Tax and interest during adjudication.

Analysis:

1. Services Provided and Delay in Registration:
The appellants provided various services falling under the Service Tax net from 1-7-2003 but obtained registration only in February 2005. The Adjudicating Authority imposed penalties for this delay, which was upheld by the learned Commissioner (A). The appellants argued that they did not collect any Service Tax amount and believed their services were exempt due to being a Small Scale Industry (SSI) unit. However, the authorities found that the appellants should have registered earlier as Service Tax providers for the services rendered.

2. Non-disclosure of Past Transactions:
The appellants failed to disclose past transactions to the authorities promptly. The Adjudicating Authority noted that it took seven months for the appellants to declare their past liabilities after being asked by the department. The appellants contended that they were under a bona fide impression, but the authorities emphasized the importance of timely disclosure, especially upon receiving communication from the authorities.

3. Imposition of Penalties:
The appellants argued against the imposition of penalties, stating that they paid the entire Service Tax amount and interest before the issuance of the show cause notice and during the adjudication proceedings. However, the authorities maintained that penalties were warranted due to the delayed registration and non-disclosure of past transactions, as highlighted in previous tribunal decisions and provisions of the Finance Act, 1994.

4. Decision and Upholding of Order:
After considering the arguments from both sides, the Tribunal upheld the impugned order, rejecting the appeal. The Tribunal agreed with the findings of the Adjudicating Authority and the learned Commissioner (A) that the penalties were justified given the circumstances. The appellants' delay in registration, non-disclosure of past transactions, and failure to respond promptly to authorities' inquiries were crucial factors in the decision to uphold the penalties. The Tribunal emphasized the importance of compliance with Service Tax regulations and timely communication with the tax authorities.

This comprehensive analysis of the judgment highlights the key issues involved, the arguments presented by both parties, and the reasoning behind the Tribunal's decision to uphold the penalties imposed on the appellants.