2019 (9) TMI 243 - AT - Service Tax

Reduction in the quantum of penalty u/s 78 - Failure to deposit the tax amount with Government - services of transportation of passengers by air - April 2009 to March 2014 - HELD THAT - The Learned Commissioner (Appeals) has extended the statutory benefit of discharging 25% of the penalty imposed under Section 78 of Finance Act, 1994 subject to fulfillment of the condition laid down under the said provision. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Reduction of penalty under Section 78 of the Finance Act, 1994.
2. Interpretation of statutory provisions for penalty imposition.
3. Applicability of penalty reduction conditions.

Analysis:
1. The case involved an appeal by the Revenue against the order passed by the Commissioner of Central Tax (Appeals-I), Mumbai, regarding the imposition of penalties on a foreign airline for failure to deposit Service Tax collected on the sale of air tickets outside India during the period April 2009 to March 2014. The Respondent had paid the tax amount of &8377; 44,37,239/- along with interest after being notified by the Audit Department. The Show Cause Notice was issued, leading to the imposition of penalties under Sections 77(2) and 78 of the Finance Act, 1994.

2. The Revenue contended that the penalty reduction by the Learned Commissioner (Appeals) was erroneous as the Respondent had failed to discharge the Service Tax despite collecting it from passengers. On the other hand, the Respondent argued that they were entitled to a 25% reduction in the penalty under Section 78 of the Finance Act, 1994, as they had paid the entire tax amount and interest before the Show Cause Notice was issued. The Respondent's Advocate highlighted the statutory provision allowing for penalty reduction subject to fulfilling certain conditions.

3. The Member (Judicial) of the Appellate Tribunal upheld the order of the Learned Commissioner (Appeals), stating that the Respondent had fulfilled the conditions for the 25% penalty reduction under Section 78 of the Finance Act, 1994. It was noted that the Respondent had paid the tax and interest promptly upon being notified by the Audit Department, which aligned with the statutory benefit provision. The Tribunal found no discrepancies in the impugned order and rejected the Revenue's appeal, deeming it devoid of merit.

This judgment emphasizes the importance of compliance with statutory provisions in penalty imposition cases and the significance of timely payment of taxes to avail of statutory benefits.