2008 (2) TMI 115 - AT - Service Tax

Appellants had certain doubts regarding their liability to service tax- further seen that appellant hadn t collected tax from the client - Original Authority himself didn t impose any penalty u/s 78 considering the facts & circumstances of the case, we set aside the penalties imposed u/s 76 & 77 - appellant is liable to pay interest on the delayed payment, as the various decisions cited by the appellant relate to Central Excise & are not applicable to delayed payment of Service Tax

Summary

Issues:
Proceedings for non-payment of service tax, imposition of penalties under various sections, applicability of penalties when service tax paid before show cause notice, liability to pay interest on delayed payment.

Analysis:
The appeal was filed against an order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Mangalore, regarding non-payment of service tax. The Adjudicating Authority confirmed an amount due for a specific period and imposed penalties under Sections 75, 75A, 76, and 77. The Original Authority did not impose a penalty under Section 78. The appellants contested the penalties before the Commissioner (Appeals) and subsequently approached the Tribunal seeking relief.

During the hearing, the appellants argued that service tax had been paid before the show cause notice was issued. They also claimed unfamiliarity with service tax provisions as the reason for not collecting it from clients. The appellants cited various case laws to support their argument that penalties and interest should not be imposed when service tax is paid before the show cause notice.

After careful consideration, the Tribunal found that the appellants were not contesting the issue on merits. It was noted that the appellants had doubts about their liability to service tax and had not collected it from clients. In light of these circumstances, the Tribunal set aside the penalties imposed under Sections 76 and 77. However, the Tribunal ruled that the appellants were liable to pay interest on the delayed payment, as the case laws cited by the appellants were related to Central Excise and not directly applicable to delayed payment of Service Tax. The appeal was disposed of accordingly.

The judgment highlights the importance of timely payment of service tax and the consequences of non-compliance. It also emphasizes the need for businesses to be aware of their tax liabilities and obligations. The Tribunal's decision to set aside certain penalties while upholding the liability for interest underscores the nuanced approach taken in tax matters, considering the specific circumstances of each case.