2018 (5) TMI 1225 - AT - Service Tax

Non-payment of service tax - tax collected but not paid - demand with interest and penalty - Held that - the appellant has collected the service tax but the same has not been paid in the Government treasury. The reasons given by the appellant for not depositing the same is not very convincing. Further, the appellant has paid the entire service tax along with 15% of the service tax as penalty as against 25% of the penalty. Therefore I direct the appellant to pay the 10% of the remaining service tax as penalty as directed by the original authority. Liability of interest - Held that - the appellants are liable to pay the interest because there is a delay in the payment of service tax and the interest liability is automatically attracted. Appeal disposed off.

Summary

Issues:
- Discrepancy in taxable value between balance sheet and ST3 returns
- Demand of differential service tax, interest, and penalties
- Appeal against Commissioner(Appeals) rejection
- Appellant's liability for service tax collection but non-payment
- Appellant's plea for leniency due to financial crisis

Analysis:
1. The case involved a preventive enquiry revealing a difference in taxable value between the balance sheet and ST3 returns. The Assistant Commissioner issued a show-cause notice demanding differential service tax, interest, and penalties. The Commissioner(Appeals) rejected the appellant's appeal, leading to the present appeal.

2. The appellant, a partnership firm, attributed the short-payment mistake to their deceased partner and admitted to the service tax liability. The appellant paid the demanded service tax and a portion of the penalty, seeking leniency due to financial difficulties. The appellant's counsel argued that the impugned order lacked legal sustainability and requested a reconsideration of the penalties imposed.

3. The AR contended that the appellant admitted to collecting service tax but failing to remit it to the government. The original authority directed the appellant to pay 25% of the service tax as penalty within a specified timeframe, which the appellant did not comply with fully. The AR emphasized the importance of penalty payment and interest liability in such cases.

4. Upon review, the Tribunal acknowledged the appellant's collection of service tax without payment to the government. While the appellant paid the entire service tax and a portion of the penalty, the Tribunal found the reasons for non-depositing the tax unconvincing. The Tribunal directed the appellant to pay the remaining penalty of 10% and the accrued interest within two months, emphasizing the automatic liability for interest due to delayed payment.

5. The Tribunal partially allowed the appeal, requiring the appellant to fulfill the specified penalty payment and interest obligations within the stipulated timeframe. The decision aimed to balance the appellant's plea for leniency with the legal obligations regarding service tax payment and penalties, ultimately disposing of the appeal on these terms.