2018 (10) TMI 646 - AT - Service Tax

Penalty u/s 77 and 78 of FA - Returns not filed by appellant - non-payment of service tax - benefit of reduced penalty - Held that - The appellant got themselves registered under the service tax, vide registration dated 07/11/2008. In spite of getting themselves registered, appellant did not file ST-3 returns nor deposited the service tax in question. The appellant s plea that the service tax was not being deposited on account of financial difficulties being faced by them cannot be appreciated inasmuch it was the legal obligation on the part of the assessee to deposit the service tax in time - penalty upheld. Benefit of reduced penalty - Held that - The option having been granted by the Appellate Authority to deposit the 25% penalties within a period of 30 days from the date of passing of impugned Order-in-Appeal, having not been exercised by the assessee, no further extension can be granted for exercise of said option. Appeal dismissed - decided against appellant.

Issues:
1. Challenge to penalty imposed under Sections 78 and 77 of the Finance Act.
2. Non-payment of service tax by the appellant.
3. Imposition of penalties under Sections 76, 77, and 78.
4. Appellant's contention of financial difficulties as a reason for non-payment.
5. Appellant's registration under service tax laws.
6. Appellant's failure to file ST-3 returns and deposit service tax.
7. Justification of penalties by the Revenue.
8. Appellant's plea for reduction of penalty.

Analysis:
1. The appeal before the Appellate Tribunal CESTAT ALLAHABAD involved a challenge to the penalty imposed under Sections 78 and 77 of the Finance Act. The appellant, engaged in providing construction services, had failed to file ST-3 returns or pay service tax for the period 2008-09 onwards. The appellant's plea of financial difficulties for non-payment was considered, but it was noted that registration under service tax laws imposed a legal obligation to pay taxes.

2. The appellant's failure to deposit service tax despite registration was a key issue. Officers found that the appellant had not filed returns or paid service tax on services provided to a client. The appellant's argument of financial constraints affecting tax payment was countered by the Revenue, emphasizing the legal responsibility to pay taxes regardless of client payments.

3. Penalties under Sections 76, 77, and 78 were imposed by the Adjudicating Authority, with the Commissioner (Appeals) upholding most aspects but reducing the quantum of service tax and penalties. The appellant's failure to avail the option to deposit a reduced penalty within a specified period led to the rejection of their appeal by the Tribunal.

4. The Tribunal found no merit in the appellant's argument of financial difficulties justifying non-payment of service tax. It was emphasized that the case involved a clear suppression of facts regarding service provision, leading to penalties being deemed justified by the Authorities.

5. Despite the appellant's deposit of the entire service tax, the Tribunal upheld the penalties imposed, noting that the option to reduce penalties had not been exercised within the specified timeframe. The Tribunal concluded that no further extension could be granted for the appellant to avail of the reduced penalty option.

6. In summary, the Tribunal rejected the appeal, upholding the penalties imposed under Sections 78 and 77 of the Finance Act due to the appellant's failure to comply with service tax obligations despite registration and the option provided by the Appellate Authority.

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