2019 (1) TMI 68 - AT - Service Tax

Penalty u/s 78 of FA - non-payment of service tax - it was alleged that the appellants have collected the Service Tax and not paid the same in the Government treasury which itself tantamount to malafide on the part of appellant - suppression of facts - Held that - The appellants have collected the Service Tax and not paid the same to the Government treasury and also filed late Return for the impugned period - when the audit was conducted and the Audit Party found that the appellants are liable to pay Service Tax, the appellant conceded his liability and paid a part of the amount and thereafter filed the Return on 13.07.2015. Also, subsequently before adjudication he paid the remaining amount but did not pay the interest which was paid subsequently. During the relevant period as per Section 78 the penalty shall be 50% of the Service Tax for the period beginning from 8th April, 2011 up to the date on which the Finance Act, 2015 receives the assent of the President. Further, as per the provision of Section 78 prevailing till March 2015 in respect of accounted transactions penalty imposable under Section 78 of the Act was 50% of the Service Tax. By following the said provision, the Commissioner of Central Tax has held that penalty imposable under Section 78 has been restricted to 50% of the Service Tax for the period till March 2015 and the said decisions have also been placed on record by the appellant. The penalty restricted to 50% of the duty demand - appeal allowed in part.

Summary

Issues:
Appeal against order upholding Service Tax liability and penalty imposition under Section 78.

Analysis:
The appeal was against an order upholding a Service Tax liability and penalty imposition under Section 78. The appellant, a service provider, was found liable for various Service Tax amounts, including excess CENVAT credit and non-inclusion of charges. The appellant accepted most objections raised during an audit but disputed charges related to stationary. The appellant paid the demanded amounts and faced a Show Cause Notice (SCN) proposing further demands, interest, and penalties. The Assistant Commissioner confirmed the demand and penalty, which the Commissioner (A) upheld, leading to the present appeal.

The appellant argued that the impugned order lacked proper appreciation of facts and law. They contended that they accepted their liability, paid the due amounts promptly, and filed returns accordingly. The appellant questioned the legality of the SCN issued for already paid amounts. They argued against invoking the extended limitation period and penalty imposition under Section 78, citing relevant legal provisions and precedents. The appellant also highlighted restrictions on penalty imposition under Section 78 for transactions till March 2015.

The respondent defended the order, emphasizing the appellant's collection of Service Tax without remittance to the government, late filing of returns, and non-payment despite collection. The respondent cited legal precedents supporting penalty imposition under Section 78 for non-remittance of collected taxes. The Tribunal concurred with the respondent's arguments, noting the appellant's actions, late payments, and cited legal precedents. The Tribunal upheld the penalty imposition but restricted it to 50% of the Service Tax amount, in line with the provisions prevailing till March 2015.

In conclusion, the Tribunal partially allowed the appeal, restricting the penalty to 50% of the Service Tax demand. The decision was based on the appellant's actions, legal provisions, and precedents supporting penalty imposition for non-remittance of collected Service Tax. The judgment was pronounced on 31/12/2018.