2009 (7) TMI 513 - AT - Service Tax

Penalty u/s 76,77,78- Circular No. 341/18/2004-TRU, dated 17.12.2004- The assessee availed goods transport s agent (GTA) service during relevant period. The Commissioner confirmed demand of service tax on the assessee and imposed penalties under section 76 and 77, however he dropped the penalty u/s 78. Appellant submits the reasonable cause for the failure to pay service tax. In the light of the CBEC Circular No. 341/18/2004-TRU, dated 17.12.2004, clarified that in case of omission in payment of service tax, the consequence should be limited to the recovery of tax with interest payable thereon. No penalty should be imposed on such defaulter unless the default is on account of deliberate fraud, collusion, suppression of facts with an intent to evade payment of duty of Service Tax. Held that- the invocation of provisions of section 76, 77 were not justified, thus set-aside the said penalty. The Appeal is allowed.

Summary

Issues:
1. Imposition of penalty under sections 76 and 77 of the Finance Act, 1994 for non-payment of Service Tax on GTA services.
2. Interpretation of CBEC Circular No. 341/18/2004-TRU and Tribunal's decision in Alstom Projects India Ltd. v. CCE [2009] 19 STT 149 (Chennai - CESTAT).
3. Application of penalty provisions under sections 76, 77, and 78 based on the facts of the case.
4. Consideration of reasonable cause for failure to pay Service Tax under section 78 and its impact on penalty imposition.

Analysis:
1. The Tribunal addressed the issue of penalty imposition under sections 76 and 77 of the Finance Act, 1994 for non-payment of Service Tax on GTA services. The appellant argued that the liability to pay the service tax was unclear, citing CBEC Circular No. 341/18/2004-TRU and a Tribunal decision. The Commissioner extended the benefit of not imposing penalty under section 78 due to lack of evidence of deliberate fraud or suppression of facts by the appellant.

2. The Tribunal considered the interpretation of the CBEC Circular and the Tribunal's decision in Alstom Projects India Ltd. v. CCE [2009] 19 STT 149 (Chennai - CESTAT). The appellant contended that penalties under sections 76 and 77 were not justified as there was no deliberate fraud or suppression of facts. The Commissioner's order highlighted the appellant's proactive approach in registering and depositing service tax without a demand from authorities.

3. The Tribunal analyzed the application of penalty provisions under sections 76, 77, and 78 based on the facts of the case. The appellant's registration for service tax payment indicated awareness of the liability, but the Commissioner acknowledged the absence of suppression of facts by the appellant. The Commissioner rejected the invocation of section 80, which led to penalties under sections 76 and 77.

4. The Tribunal examined the consideration of reasonable cause for failure to pay Service Tax under section 78 and its impact on penalty imposition. The adjudicating authority's contradictory approach in assessing the appellant's bona fide intentions for penalty imposition under sections 76 and 77 was noted. The Tribunal set aside the penalties imposed under sections 76 and 77 in both cases, aligning with the Board's circular on penalty imposition for defaulters without deliberate fraud or suppression of facts. Ultimately, both stay petitions and appeals were allowed in favor of the appellant.