2009 (3) TMI 323 - AT - Service Tax

Interest and penalty - It appears that the Appellant has voluntarily sought registration in the registration camps organised by the department. This clearly shows the law abiding nature of the Appellant. The Appellant has also discharged its liability after registration, although, after two years. But perusal of record does not show whether any tax was collected by the-Appellant for the services provided. It was not ruled out by Revenue that the gross value received was not composed of tax component. - it would be just and proper to confirm penalty of Rs. 1000/- imposed on the Appellant under Section 77 of the Finance Act, 1994 waiving penalty of Rs. 33,484/- imposed under Section 76 and 78 of the Finance Act, 1994. - interest is payable for default period on the tax liability payable.

Issues:
1. Liability for service tax on repair and maintenance services.
2. Waiver of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.
3. Justification for penalty and interest due to delayed tax liability discharge.
4. Consideration of the Appellant's conduct and compliance with tax regulations.

Analysis:

1. Liability for service tax on repair and maintenance services:
The Appellant, a small tax under category providing repair and maintenance services, opted for registration from 7-12-04. The law regarding the levy of Service Tax on such services came into force on 1-7-03. The Appellant discharged the tax liability for the period 1-7-03 to 9-9-04 on 29-12-06. The issue arose when the Appellant realized the past tax liability and promptly discharged it. The Appellant sought leniency under Section 80 of the Finance Act, 1994, to waive penalties imposed under various sections.

2. Waiver of penalties under Sections 76, 77, and 78 of the Finance Act, 1994:
The Appellant requested the waiver of penalties amounting to Rs. 33,484 imposed under Sections 76 and 78, along with the penalty of Rs. 1000 under Section 77. The argument presented was based on the Appellant's lack of awareness regarding the tax liability for the mentioned period. The Department, however, argued that the penalties were justified due to the delay in discharging the tax liability and failure to file a return.

3. Justification for penalty and interest due to delayed tax liability discharge:
The Department contended that despite seeking registration in 2004, the Appellant discharged the tax liability two years later. This delay was cited as the reason for imposing penalties and interest. The Department supported the levy of penalties, including the Rs. 1000 penalty for not filing a return.

4. Consideration of the Appellant's conduct and compliance with tax regulations:
After hearing both sides and reviewing the records, the Tribunal acknowledged the Appellant's voluntary registration and compliance with the tax laws, albeit with a delay in discharging the tax liability. The Tribunal noted that there was no evidence to suggest that the Appellant collected tax for the services provided. Considering the Appellant's conduct and non-litigious nature, the Tribunal partially allowed the appeal, modifying the penalties imposed and directing the payment of interest for the default period on the tax liability payable.

In conclusion, the Tribunal partly allowed the appeal, emphasizing the Appellant's compliance with tax regulations, while also addressing the delay in discharging the tax liability and the justification for penalties under the Finance Act, 1994.

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