2018 (4) TMI 1168 - AT - Service Tax

Penalty - short payment of service tax - Held that - there is no rebuttal to the fact placed before the authorities below. The demand of service tax is raised on account of the different modes of accounts being maintained by the service provider and the service recipient. It is not a case of non-levy or non-payment on account of any misstatement or suppression of facts with intend to evade payment of duty - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues: Penalty imposition for non-payment of service tax.

Analysis:
1. The appellant, a small contractor, provided services to M/s Dalla Cement Factory but did not pay service tax for the period Sept. 2010 to March 2011, as per the records of M/s Dalla Cement Factory.

2. The appellant had already deposited approximately ?91,000 as service tax along with interest, but a penalty of an equal amount was imposed, which was upheld by the Commissioner (Appeals), leading to the present appeal challenging the penalty imposition.

3. The sole challenge in the appeal was the penalty imposed by the lower authorities.

4. The appellant argued that they deposited service tax on a receipt basis while M/s Dalla Cement maintained records on an accrual basis, causing a discrepancy in service tax payment. The appellant claimed no malafide intent, as they were to deposit the tax upon receiving consideration from the service recipient.

5. The Tribunal noted that there was no evidence to counter the appellant's claim regarding the difference in accounting methods between the service provider and recipient. The demand for service tax arose due to the varying accounting practices, not due to intentional evasion. Therefore, the Tribunal found no justification for upholding the penalty and set it aside, allowing the appeal.

This judgment highlights the importance of considering the circumstances leading to non-payment of service tax, especially when discrepancies arise from differences in accounting practices between parties involved. The decision emphasizes the need to assess intent and the absence of malafide actions before imposing penalties for tax non-compliance.