2018 (3) TMI 1490 - AT - Service Tax

Non-payment of service tax - belated filing of returns - interest - penalty - Held that - having sufficient balance of CENVAT credit non-debiting of the service tax liability cannot be said to be with mala fide intention to evade payment of service tax - appellant have made out a case for waiver of penalty imposed under Section 78 invoking the provisions of Section 80 of the Finance Act 1994 - penalty set aside. Penalty u/s 77 - Held that - the appellant have paid late fees for delay in filing of the returns - in terms of Rule 7(C) of Service Tax Rules 1994 penalty under Section 77 is also not imposable. Interest - Held that - since there is admitted delay in payment of service tax irrespective of whether it is payable from CENVAT credit account or in cash interest is payable for the reason that interest is a picky bag of the service tax liability - Once the service tax liability is confirmed interest will come into force automatically - interest upheld. Appeal allowed in part.

Summary

Issues:
Appeal against order-in-appeal upholding penalty and interest under Sections 77, 78, and 75 of Finance Act, 1994 for non-payment of service tax.

Analysis:
The appellant did not pay service tax for January 2013 to March 2014, filed belated returns in February 2014 showing service tax debited from CENVAT credit account, seeking waiver of penalties and interest. Appellant's representative argued no delay in payment as CENVAT credit balance covered tax liability. Revenue contended statutory requirement to pay service tax on due date regardless of credit balance, citing non-payment consequences. Tribunal noted delay in filing returns, with timely filing for a later period. Tribunal found appellant had sufficient CENVAT credit balance, indicating no mala fide intention for non-payment. Waived penalty under Section 78 invoking Section 80 of Finance Act, 1994. Appellant paid late fees for return filing delay, exempting penalty under Section 77 per Rule 7(C) of Service Tax Rules, 1994. Upheld interest demand due to admitted delay in service tax payment, irrespective of payment source, as interest is integral to tax liability. Partly allowed appeal by setting aside penalties and upholding interest demand.