2019 (2) TMI 20 - AT - Service Tax

Penalty u/s 78 of FA - Manpower Recruitment and Supply Agency Services - delayed payment of service tax - intent to evade or not - only ground cited by the appellant for such non-payment between 2006-2011 was its financial crisis - Held that - The only ground cited by the appellant for such non-payment between 2006-2011 was its financial crisis but as held by the Adjudicating Authority and confirmed by the Commissioner (Appeals), financial crisis cannot form sole basis for non-payment of tax, when the same was collected by the appellant from the service receiver - Furthermore, the intention of the appellant to evade tax is understood form its very conduct of non-filing of periodic returns and even not answering to the notices sent at least on three occasions. Therefore, it is a clear case where department has proved the fact of intentional suppression of fact for the purpose of evading the tax liability - demand upheld. Appeal dismissed - decided against appellant.

Summary

Issues:
- Duty demand confirmation with interest, penalty, and late fee for the period between April 2006 to March 2011.
- Duty demand confirmation with penalty and late fee for the period between April 2013 to March 2014.
- Appellant's non-payment of Service Tax liability and challenges to penalties imposed.
- Applicability of Notification No. 30/2012-ST on the duty demand.
- Arguments for penalty waiver under Section 80 of the Finance Act, 1994.
- Respondent's support for the Commissioner's order and appellant's status as a habitual offender.
- Commissioner's reduction of penalty under the proviso to Section 78 of the Finance Act, 1994.

Analysis:

1. The appellant contested the duty demand and penalties imposed by the Commissioner of Central Tax, Central Excise & Service Tax (Appeals) for two periods: April 2006 to March 2011 and April 2013 to March 2014. The appellant argued financial crisis prevented the payment of Service Tax, requesting penalty waivers under Section 80 of the Finance Act, 1994. Additionally, the appellant claimed re-quantification of duty demand post the effective date of Notification No. 30/2012-ST. Various case laws were cited to support the appellant's position.

2. The respondent, represented by the Assistant Commissioner, supported the Commissioner's order, labeling the appellant as a habitual offender for not filing returns or discharging tax liabilities. The respondent argued against interference in the Commissioner's decision, emphasizing the appellant's consistent non-compliance with tax obligations.

3. Upon review, the Tribunal noted the appellant's failure to discharge Service Tax liabilities despite intelligence reports and notices. The appellant's financial crisis was deemed insufficient justification for non-payment, especially since the tax was collected from the service recipient. The Tribunal found intentional suppression of facts by the appellant, evident from non-filing of returns and ignoring notices. The cited case laws were deemed irrelevant to the present case.

4. The Commissioner, in a detailed order, reduced penalties under the proviso to Section 78 of the Finance Act, 1994 for specific periods. The Tribunal found no irregularities in the Commissioner's decision, upholding the penalties and confirming the duty demands. Consequently, the appeals were dismissed, affirming the Commissioner's Order-in-Appeal dated 25.01.2018.

This comprehensive analysis outlines the issues, arguments presented by both parties, the Tribunal's assessment, and the final decision rendered in the legal judgment.