2018 (9) TMI 1277 - AT - Service Tax

Penalty u/s 78 of FA - non-payment of Service Tax - the fact came to the notice of the Revenue by comparing the ST-3 Returns figures with the entries made in profit and loss account as also in balance sheet - Held that - There is no evidence on record to reflect upon any mala fide of the assessee so as to invoke the penal provisions against them. Further the appellant is a public sector undertakings of Government of India and as such cannot have any mala fide intent to evade payment of duty - penalty not warranted - appeal allowed - decided in favor of appellant.

Summary

Issues: Penalty under Section 78 of the Finance Act, 1994

Analysis:
The appellant, engaged in 'Banking and Financial Services,' was penalized for not paying service tax amounting to ?1,67,22,095 in relation to services provided to a specific entity. The appellant contended that they believed services to State Governments were not taxable, hence the non-payment. They rectified the situation by paying the tax promptly upon receiving a show cause notice. The appellant, being a public sector undertaking of the Government of India, argued there was no mala fide intent to evade duty. The tribunal acknowledged the appellant's genuine belief and lack of evidence of mala fide intent, leading to the decision to set aside the penalty under Section 78 and Section 77 of the Finance Act. The demand for service tax and interest was confirmed, but the penalty was waived due to the appellant's reasonable belief and lack of malicious intent.