2021 (4) TMI 713 - AT - Service Tax

Levy of penalty u/s 76 and 77 of FA - Non-filing/late filing of service tax returns - demand on the ground that the Service tax deposited through e-lekha but not deposited the service tax electronically as required under Rule 6(B) to Service Tax Rules 1994 - HELD THAT - The appellant was having temporary registration without PAN, they could not get the user id and password for filing returns on the net portal. Further, in spite of pursuance with the Service Tax Department, the Pan number could not be taken because Post Office was a Central Government Department under the Department of Post Telegraph. The appellant was issued online user Id and password on their temporary registration number and the pass word was activated in the year 2013-2014 and thereafter, they were able to file their returns. Further, the appellant had made sufficient compliance as service tax was already paid in time. The third proviso under Rule 7(C) of Service Tax Rules 1994 provides that, where the gross amount of service tax payable is nil, the central excise officer may, on being satisfied that there is sufficient reason for not filing the returns, reduce or waive the penalty. There is genuine reasons for not filing or late filing of the service tax returns. Further, admittedly, the appellant had paid the service tax and thus, there was no intention to evade payment of service tax - Penalty set aside - appeal allowed in part.

Issues:
1. Applicability of Rule 6(B) of Service Tax Rules 1994 regarding electronic payment of service tax.
2. Compliance with electronic payment requirement by the appellant.
3. Imposition of penalty under various sections of the Finance Act, 1994.
4. Commissioner (Appeals) decision to set aside the demand of service tax with interest and penalty under Sections 76 and 77 but uphold the penalty under Section 70.
5. Consideration of genuine reasons for late filing of service tax returns and waiver of penalty under Section 70.

Analysis:
1. The judgment concerns the appellant, a Post Master at a Post Office, Dungarpur, who was paying service tax through book adjustment or 'e-lekha'. An amendment in 2014 required electronic payment of service tax. The appellant failed to comply with this requirement, leading to a demand of service tax amounting to &8377; 2,78,341 for the year 2014-2015, along with interest and penalties under various sections of the Finance Act, 1994.

2. The appellant appealed to the Commissioner (Appeals), who found that the appellant had paid the service tax through the e-lekha portal, which was considered sufficient compliance with the law. The Commissioner noted that the appellant faced challenges in obtaining a PAN due to being a Central Government Department, but had made efforts to file returns and had paid the service tax on time. Consequently, the demand of service tax with interest was set aside, while the penalty under Section 70 was upheld.

3. The third proviso under Rule 7(C) of the Service Tax Rules 1994 allows for a reduction or waiver of penalty if there are genuine reasons for not filing returns when the gross amount of service tax payable is nil. In this case, the Tribunal, after reviewing the facts and the Commissioner's findings, concluded that there were valid reasons for the late filing, and since the service tax had been paid without any intention to evade payment, the penalty under Section 70 was set aside.

4. The Tribunal allowed the appeal, modifying the impugned order to reflect the waiver of the penalty under Section 70. The judgment emphasizes the importance of genuine reasons for late filing and the intention behind the payment of service tax in determining the applicability of penalties under the law.

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