2006 (2) TMI 30 - AT - Service Tax

Service Tax Appellant paid their all liability of service tax interest and penalty with in 30 days of the date of order-in-original Not liable to imposition of penalty

Summary

Issues:
1. Imposition of penalty on appellant for failure to register under service tax provisions.
2. Consideration of penalty under Sections 76 & 75A of the Finance Act, 1994.
3. Applicability of C.B.E.C. Circular dated 20.9.2004 for immunity from penalties.
4. Interpretation of provisions of Section 78 regarding penalty payment.

Analysis:
1. The appellant, a dealer of Indian Oil Corporation, failed to register as a C & F agent under service tax provisions. The department issued a show cause notice for recovery of service tax from October 1999 to December 2003. The adjudicating authority confirmed the demand and imposed penalties under Sections 78, 76, and 75A. The appellate authority upheld the penalties, leading to the current appeal.

2. The appellant's advocate argued that the appellate authority should have considered the fact that 25% of the penalty was already deposited under Section 78. He also cited a C.B.E.C. Circular granting immunity for timely registration and payment of service tax. The Departmental Representative contended that the appellant should have known the law and registered timely, disputing the applicability of the Circular to the case.

3. The Tribunal found that the appellant had paid the service tax, interest, and 25% of the penalty before the deadline specified in Section 78. It held that the balance penalty under Section 78 was not payable since the appellant had fulfilled the 25% requirement. Regarding penalties under Sections 76 & 75A, the Tribunal considered a Board Circular from 2004, which aimed to grant amnesty to service providers registering under a specific scheme by waiving penalties.

4. The Tribunal noted that the Board's scheme aimed to provide relief to service providers who had not registered due to error or misinterpretation of the law. It concluded that the appellant, by fulfilling the requirements of the scheme post-adjudication, should benefit from the waiver of penalties under Sections 76 & 75A. Consequently, the appeal was partly allowed, upholding the service tax, interest, and 25% penalty while setting aside penalties under Sections 76 & 75A.

Conclusion:
The Tribunal's decision clarified the application of penalty provisions under the Finance Act, 1994, considering the appellant's compliance with payment requirements and the Board's amnesty scheme. By analyzing the legal obligations and circumstances, the Tribunal balanced the imposition of penalties with the appellant's efforts to rectify the non-compliance, resulting in a partial allowance of the appeal.