2020 (1) TMI 535 - AT - Service Tax

Imposition of penalty - non/short payment of service tax - demand of tax alongwith interest and penalty - HELD THAT - As per the reports dated 25-02-2011 and dated 18- 12-2013, the Appellant has already filed ST-3 returns for the entire period under dispute and have also paid service tax of ₹ 12,99,634/- with returns and the balance amount of ₹ 70,34,271/- is paid as per stay order passed by this tribunal aggregating to ₹ 83,33,905/-, hence, the entire tax demand as per the impugned Order stood paid, which is upheld. With respect to payment of interest, the learned Authorized Representative submits that the Appellant is liable to pay interest on the delayed payment of service tax. We agree with the contentions of the learned Authorized Representative and hold that the Appellant would be liable to payment of interest in accordance with law, if not paid. We further uphold penalty of ₹ 5,000/- under Section 77 of the Finance Act, 1994 for delayed filing of returns by the Appellant. The penalty imposed U/s 78 of the Act is set aside noticing that the Appellant has already filed returns, though belatedly, and disclosed their service tax liability, hence, there is no suppression of facts etc involved in the instant case. Appeal allowed in part.

Summary

Issues:
Service Tax Demand Confirmation, Interest Payment, Penalty Imposition

Service Tax Demand Confirmation:
The case involved an appeal against an Order-in-Original confirming a Service Tax demand of ?83,33,905 for the period June 2007 to May 2009 under Section 73(2) of the Finance Act, 1994. The demand was based on the Appellant's alleged failure to pay or short payment of Service Tax on services provided to a party. The Appellant contended that they had disclosed the taxable value in their ST-3 returns for the relevant periods, which were not considered while issuing the show cause notice. The Tribunal directed the Revenue to verify the Appellant's claim by examining the filed ST-3 returns. Subsequently, it was found that the Appellant had indeed filed the ST-3 returns and paid a significant portion of the service tax amount, resulting in the entire tax demand being paid. The Tribunal upheld the demand based on the paid amount.

Interest Payment:
Regarding interest payment, the Tribunal agreed with the Revenue that the Appellant was liable to pay interest on delayed service tax payments in accordance with the law. The Tribunal upheld this aspect of the decision, emphasizing the Appellant's liability to pay interest if not already paid.

Penalty Imposition:
In terms of penalties, a penalty of ?5,000 under Section 77 of the Finance Act, 1994 was upheld for the delayed filing of returns by the Appellant. However, the penalty imposed under Section 78 was set aside. This decision was based on the finding that the Appellant had filed returns, albeit belatedly, and disclosed their service tax liability, indicating no suppression of facts. Therefore, the Tribunal concluded that there was no basis for imposing a penalty under Section 78. The appeal was partly allowed in the specified terms, with the Order pronounced on 17 December 2019.