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2024 (6) TMI 621 - AT - Service TaxInvocation of Extended period of limitation - Non-payment of service tax - demand alongwith interest and penalty - HELD THAT - Admittedly the Appellant is not disputing that they were collecting the Service Tax from their clients and were required to pay Rs.8,45,998/- during the period under dispute. They had not paid the Service Tax nor had they filed their ST-3 Returns. Only in view of the detailed investigation taken up by the departmental officials, the fact of non-payment of Service Tax has come to light. Therefore, the Department is justified in issuing the demand by invoking the extended period provisions under Section 73 of the Finance Act. However, it is found that When the extended period provisions are invoked, the penalty is required to be imposed under Section 78(1). In the normal course, the penalty would be equivalent to the Service Tax evaded. Interest u/s 75 - HELD THAT - While the demand pertains to the year 2011-12 to 2014-15, the Appellant has paid the amount of Rs.4,78,730/- in December 2016 and they have paid Rs.3,67,268/- in June 2017. The Appellant is required to pay the interest in terms of Section 75 - as per the proviso to Section 75, the interest payable could be reduced 3% per annum. The Adjudicating authority is directed to verify the claim of the Appellant and arrive at the interest payable after taking this provision into account. The Adjudicating authority should consider that the interest is payable only upto to the date of making the payment of Service Tax. Accordingly, the interest may be calculated and the Appellant may be directed to pay the same after taking into account Rs.30,000/- already paid by the appellants as interest. Other penalties/late fee etc. imposed on the present Appellant upheld. Appeal disposed off.
Issues involved: Service Tax non-payment, Penalty under Section 78, Interest under Section 75, Appellant's financial situation.
Summary: The Appellant, registered for 'Works Contract Service' and 'Event Management Service', faced a demand of Rs.11,44,095/- for non-payment of Service Tax during 2011-12 to 2014-15. The Adjudicating Authority confirmed a demand of Rs.8,45,998/- and imposed a penalty under Section 78. The Commissioner(Appeals) rejected the appeal challenging the penalties imposed. The Appellant contended that penalty should be reduced to 50% due to financial constraints. The Department argued that full penalty is justified due to non-remittance of collected Service Tax. Upon review, it was found that the Appellant did not dispute the Service Tax liability and had not filed ST-3 Returns. The penalty under Section 78(1) was discussed, with the first proviso allowing for a reduced penalty if transaction details are recorded in specified records. The Appellant's case fell under this proviso, leading to a modification of the penalty to 50% of the confirmed demand. Regarding interest under Section 75, the Appellant's payments in December 2016 and June 2017 were considered. The Appellant's claim for reduced interest rate due to being a small firm was noted, and the Adjudicating authority was directed to calculate the interest payable accordingly. The Appellant was given time to complete the payment of interest and 50% penalty by a specified date. Other penalties and late fees imposed on the Appellant were not interfered with, and the appeal was disposed of accordingly.
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