2019 (3) TMI 1051 - AT - Service Tax

Levy of late fee - ST-3 returns have not been filed in time - Scope of Rule 7C read with Section 70 - Section 68 (1) of Finance Act, 1994 - Held that - Section 68 (1) of Finance Act, 1994 requires every person providing service to any person to pay service tax at the rate specified in Section 66 ibid in such manner and within such period as may be prescribed. Further, Rule 6 (2) of Service Tax Rules, 1994 says that the assessee shall deposit the service tax liable to be paid by him with the bank designated by Central Board of Excise and Customs for this purpose in form TR-6 or in any other manner prescribed by the Central Board of Excise and Customs - Most importantly Rule 6 of Service Tax Rules, 1994 says that the service tax shall be paid to the credit of Central Government by the 6th day of the month and if it is to be deposited electronically through internet banking, by the 5th day of the month, immediately following the calendar month in which the service deemed to be provided as per the rules framed in this regard. From the record, it is also apparent that the ST-3 returns for 6 April 2010 till March 2015, cause thereof, have not been filed in compliance of the afore-said Rule 6 of Service Tax Rules. Rather there has been the delay in filing as big as that of 1016 days and as minimum as that of 25 days - It is also apparent that ST-3 return for October 2012 to March 2013 has not been filed till date. This is a definite violation of the afore-said provisions and specifically violation of Section 70 of the Finance Act. Also Rule 7 (c) of Service Tax Rules, 1994 is a provision making assessee to pay late fee in case the above said time limit has not been met with by the assessee. There is no rebuttal on the part of the appellant to the afore-notice delay in submission of ST-3 returns. The confirmation of penalty/late fee in view of Rule 7 (c) of Service Tax Rules, 1944 readwith the Section 70 of Finance Act, 1994 - appeal dismissed.

Summary

Issues: Late filing of ST-3 returns, payment of service tax through Cenvat credit and book adjustment, violation of Section 68 (1) of the Finance Act, 1994, imposition of late fee, confirmation of penalty by Commissioner (Appeals).

The judgment pertains to an appeal against an order-in-appeal dated 30/01/2018 concerning the late filing of ST-3 returns by the appellants engaged in providing taxable services, including banking and financial services. The Department observed that service tax payments were made through Cenvat credit and book adjustment, leading to a show cause notice for recovery of dues under Section 68 (1) of the Finance Act, 1994 and Rule 6 (2) of Service Tax Rules, 1994. The original adjudication dropped the demand but confirmed penalties. The subsequent appeal partially allowed dropping a penalty but confirming a late fee. The appellant, aggrieved, approached the Tribunal.

The appellant did not appear, seeking exemption from presence during the final hearing. The Department's Authorized Representative argued that penalties were dropped, and the service tax demand via book adjustment was also waived. Late filing attracts penalties as per the Act's mandate, necessitating dismissal of the appeal.

The key issue for adjudication was whether the Department could levy a late fee for delayed ST-3 returns filing. Section 68 (1) of the Finance Act, 1994 mandates timely service tax payment, with Rule 6 (2) requiring depositing service tax with the designated bank. Non-compliance with filing deadlines, as per Rule 6, was evident from the record, ranging from 25 to 1016 days delay. Rule 7 (c) allows for a late fee in case of such delays, constituting a violation of Section 70 of the Finance Act. The Commissioner (Appeals) upheld the penalty/late fee under Rule 7 (c) read with Section 70, finding no rebuttal from the appellant.

Considering the legal provisions, the Tribunal upheld the confirmation of penalty/late fee, finding no infirmity in the impugned order. The appeal was dismissed accordingly.