2009 (9) TMI 258 - AT - Service Tax

Consulting Engineer and Erection and commissioning services- Penalty-Held that- the appellant was not aware under which head he has to deposit that service tax amount and after confirmation from the department, he deposited the service tax amount and on pointing out by the department he has to pay the interest also on that amount, he paid the interest also. The appellant was under the bona fide belief, did not deposit the service tax in time. Thus there is no merit in the impugned order and the same is set aside, the appeal is allowed with consequential relief.

Summary

Issues:
Confirmation of penalty under section 76 of the Finance Act against the appellants.

Analysis:
The case involved the confirmation of a penalty of Rs. 26,325 under section 76 of the Finance Act against the appellants for failure to pay service tax on time and not filing the Service Tax-3 return promptly. The appellant had collected service tax for providing services of Consulting Engineer & Erection, Commissioning Service but failed to deposit it with the treasury as per the findings during scrutiny of records by the department. While penalties under sections 77 and 78 were dropped, the penalty under section 76 was confirmed by the original adjudicating authority. The appellant contended that they collected the service tax provisionally under protest and were unsure about the correct head for depositing the amount. Upon clarification from the department, they deposited the service tax and interest, believing they were not required to pay interest. The appellant argued that there was no intention to evade payment, and the penalty should not be imposed.

Upon hearing the case, the judicial member noted that the appellant had indeed collected the service tax but was uncertain about the correct procedure for depositing it. After receiving clarification from the department, the appellant promptly deposited the service tax and interest as required. The judicial member found that the appellant's actions were based on a bona fide belief and there was no intention to evade payment. Consequently, the impugned order confirming the penalty under section 76 was set aside, and the appeal was allowed with any consequential relief.

This judgment highlights the importance of proper compliance with tax regulations and the significance of acting in good faith. It underscores the need for clarity and understanding of the legal requirements to avoid penalties and disputes related to tax payments. The case also demonstrates the role of appellate tribunals in reviewing decisions based on the facts and circumstances presented before them, ensuring fair treatment and justice in tax matters.