2018 (9) TMI 752 - AT - Service Tax

Penalty - service tax liability paid, but interest not paid - invocation of section 80 for setting aside penalty - Held that - It is clear from the records, the appellant paid the service tax liability but not paid the interest. In the absence of any such evidence, the Provisions of Section 80 or any other provisions to set aside the penalty would be incorrect as the appellant was given enough opportunities to discharge the interest liability also - appeal dismissed - decided against appellant.

Issues:
1. Failure to pay service tax for Manpower Supply services.
2. Allegations of suppression of facts and evasion of taxes.
3. Imposition of penalties under various sections of the Finance Act, 1994.
4. Appeal against the order of the lower authority and First Appellate Authority.
5. Discharge of service tax liability but non-payment of interest leading to penalty.

Analysis:
1. Failure to pay service tax for Manpower Supply services: The appellant, a service tax registrant, was found to have provided Manpower Supply services without proper registration, filing of returns, or payment of service tax. The Department discovered this discrepancy during an audit intervention, leading to a demand of unpaid service tax amounting to ?8,86,215 under the category of "Manpower Recruitment or Supply Agency Service."

2. Allegations of suppression of facts and evasion of taxes: The Department alleged that the appellant intentionally suppressed the provision of taxable services to evade payment of taxes. It was observed that the appellant, despite being aware of legal provisions, did not fulfill their tax obligations, which could have resulted in a significant loss to the exchequer. The Department concluded that the appellant contravened Sections 67, 68, and 69 of the Finance Act, 1994.

3. Imposition of penalties under various sections of the Finance Act, 1994: The appellant was issued a show cause notice and subsequently penalized for various violations. The lower authority confirmed the demand for unpaid service tax, imposed penalties under Sections 78, 77(1)(a), and 77(2) of the Finance Act, 1994. The penalties were imposed for suppression of facts, delay in registration, and non-filing of ST-3 returns.

4. Appeal against the order of the lower authority and First Appellate Authority: The appellant appealed against the order of the lower authority, which was subsequently rejected by the First Appellate Authority after due process. The issue in contention was the services provided under the category of Manpower Recruitment or Supply Agency Services, with the appellant not contesting the tax demand as the entire tax liability was already paid.

5. Discharge of service tax liability but non-payment of interest leading to penalty: The appellate tribunal, upon reviewing the records, found that the appellant had discharged the entire service tax liability but failed to pay the interest. Despite the appellant's payment of the tax liability, the non-payment of interest led to the imposition of penalties. The tribunal held that the penalties imposed were justified, as the appellant had opportunities to fulfill the interest liability but failed to do so, leading to the rejection of the appeal.

← Previous Next →