2009 (10) TMI 192 - AT - Service Tax

Penalty- delay in filing of return and payment of service tax- Assessee delayed in filing of return and payment of service tax. Adjudicating Authority confirmed the penalty u/s 76 and 77. Commissioner(appeals) reduced the penalty u/s 76 and uphold penalty under section 77. Held that- agree with the rational adopted by the Commissioner (Appeals) in coming to the conclusion that the assessee (respondent) deserve a lenient treatment by resorting to the provisions of section 80 of Act. Thus appeal filed by revenue is rejected.

Summary

Issues:
1. Delay in filing ST-3 returns and late payment of service tax.
2. Imposition of penalty under sections 76 and 77 of the Finance Act, 1994.
3. Reduction of penalty under section 76 by Commissioner (Appeals).
4. Appeal by revenue against the reduction of penalty.
5. Consideration of lenient view under section 80 of the Finance Act, 1994.

Analysis:
1. The case involved a delay in filing ST-3 returns and late payment of service tax by M/s. S.J. Mehta & Co. for the period from April, 2006 to September, 2006. The delay in filing and payment led to contravention of the Service Tax Rules and Regulations.

2. The Assistant Commissioner issued a show-cause notice proposing penalties under sections 76 and 77 of the Finance Act, 1994. The Lower Authority imposed penalties of Rs. 88,800 under section 76 and Rs. 1,000 under section 77 through the impugned order.

3. On appeal, the Commissioner (Appeals) upheld the demand for service tax but reduced the penalty under section 76 to Rs. 25,000. The revenue appealed against this reduction, arguing that the case was not fit for a lenient view under section 80 of the Finance Act, 1994.

4. The revenue contended that the penalties should not have been reduced, citing various tribunal decisions supporting their stance. However, nobody appeared on behalf of the respondents during the proceedings.

5. The Technical Member considered the arguments presented and noted that the appellants had paid the service tax late due to ambiguity regarding the taxability of their service. The Commissioner (Appeals) took a lenient view under section 80 of the Finance Act, 1994, reducing the penalty. The Technical Member agreed with this approach, citing precedents and rejected the revenue's appeal, upholding the reduced penalty of Rs. 25,000 under section 76 and the penalty of Rs. 1,000 under section 77.

This detailed analysis covers the issues of delay in filing returns, imposition of penalties, reduction of penalties on appeal, revenue's appeal against the reduction, and the consideration of a lenient view under the relevant provisions of the Finance Act, 1994.