2007 (7) TMI 193 - AT - Service Tax

Delay in making monthly payments - assessee being new to the tax failed in complying with the provisions of the law and that omissions had occurred owing to their ignorance of statutory provisions and procedures - no mala fide intention on the part of the appellants in making the late payment - act provides for waiver of penalty where sufficient cause is shown - appellants have already paid the service tax due, assessee is directed to pay Rs. 20,000 u/s 76 & Rs.500 u/s 77 penalty reduced

Summary

Issues: Application for waiver of pre-deposit and stay of recovery of penalties under sections 76 and 77 of the Finance Act, 1994. Challenge against demand of service tax based on inaccurate quantification.

Issue 1: Application for waiver of pre-deposit and stay of penalties under sections 76 and 77 of the Finance Act, 1994.
The application was filed seeking waiver of pre-deposit and stay of recovery of penalties amounting to Rs. 44,243. The appeal was taken up for disposal after waiving the requirement of pre-deposit. The appellant contended that their failure to comply with tax provisions was due to their newness to the tax system and ignorance of statutory provisions. They had paid a significant portion of the demand before the show-cause notice was issued. The consultant for the appellant did not press the challenge against the demand of service tax and requested the penalties to be vacated. The Tribunal considered the submissions and found that the late payments were not due to any mala fide intention on the part of the appellants. The Tribunal, under section 76 of the Finance Act, directed the assessee to pay Rs. 20,000 and Rs. 500 under section 77, considering the payment of service tax already made.

Issue 2: Challenge against demand of service tax based on inaccurate quantification.
The appeal contested the demand of service tax, arguing that the quantification for certain months during the material period was inaccurately done. The appellant claimed that their non-compliance was due to their unfamiliarity with tax laws and procedures, leading to delays in monthly payments. The consultant cited a Tribunal decision where penalties were waived in a similar case. The Department argued that the penalties for late filing of returns and late payment of service tax were justified. After considering the records and submissions, the Tribunal found that while the appellants consistently paid service tax late, there was no mala fide intention. The Tribunal noted that the act allows for penalty waiver with sufficient cause shown. Ultimately, the Tribunal directed the appellant to pay Rs. 20,000 under section 76 and Rs. 500 under section 77 of the Finance Act, disposing of the appeal accordingly.