2019 (4) TMI 32 - AT - Service Tax

Imposition of penalty - the entire service tax liability along with interest was deposited by the appellant before issuance of the SCN - Invocation of sub-section (3) of Section 73 of Finance Act - Held that - Admittedly, in this case, the appellant did not comply with the statutory provisions. As a result, the department had initiated show cause proceedings against the appellant. The letter dated 21.05.2012, 10.10.2013, 04.10.20.12 addressed by the department to the appellant regarding payment of service tax and for filing of ST-3 returns were not responded at the relevant point of time. Further, it is also noticed that in some cases, the appellant had collected the service tax from the recipient of service but did not deposit the same with the Government exchequer as its statutory liability. Thus, the benefit of sub-section (3) of section 73 of the Act ibid is not available to the appellant inasmuch as the appellant has not brought any iota of evidence to prove its bona-fides regarding non-payment of service tax within the stipulated time frame. Appeal dismissed - decided against appellant.

Summary

Issues:
Imposition of penalty under Section 78 of the Finance Act, 1994 for non-compliance with service tax obligations.

Analysis:
The appellant, engaged in providing "Rent-a-Cab Service," failed to file ST-3 returns and pay service tax from 2010-2011 to 2012-2013. Show cause proceedings resulted in a confirmed service tax demand of ?49,07,767/- along with interest, and penalties under Sections 77 & 78 of the Act. The Commissioner (Appeals) modified the penalties, reducing the penalty under Section 78 to ?35,16,844/-. The appellant argued financial crisis caused the delay, citing a Tribunal decision for support. The Revenue contended the deposit was made only after the department pointed out discrepancies, indicating fraudulent intent. The Tribunal noted the appellant's non-compliance, failure to respond to departmental communications, and collection of service tax without remittance. The appellant failed to prove bona fides for non-payment within the stipulated time frame. The Commissioner (Appeals) provided detailed reasons for the penalty reduction, which the Tribunal upheld, dismissing the appeal.

This judgment highlights the importance of timely compliance with service tax obligations and the consequences of non-compliance. The Tribunal emphasized the appellant's failure to meet statutory obligations, lack of evidence to support claims of financial crisis, and improper collection of service tax without remittance. The decision underscores the significance of demonstrating bona fides in tax matters and the authority's discretion in penalty imposition based on detailed findings. The case serves as a reminder for taxpayers to adhere to statutory requirements to avoid penalties and legal consequences.