2009 (9) TMI 389 - AT - Service Tax

Transport agency s services- This is an appeal by Revenue against order-in-appeal No. 14-ST/LKO./2008, dated 30-1-2009 passed by Commissioner (Appeals). The respondent paid certain amount of service tax only for the month of January and February, 2005 and thereafter challenged this levy by filing a writ petition before Hon ble Allahabad High Court. Hon ble Allahabad High Court granted stay on collection of service tax in March, 2005 but Hon ble High Court dismissed the writ petition on 12-8-2005. The respondent however, still did not start the payment of service tax and paid the balance amount of service tax for January, 2005 to March, 2006 period only on 31-3-2006 and, thereafter, they paid interest on this service tax sometime in July, 2007. The Deptt., however, issued a SCN on 24-10-2007 for imposition of penalty on the appellant under section 76 for non-payment of service tax during January, 2005-March, 2006 period by the due date. The Asstt. Commissioner vide order-in-original dated 29-4-2008 imposed the penalty under section 76 which is at the rate of Rs. 200 per day subject to the ceiling of the non-paid tax. The respondent filed an appeal before the Commissioner (Appeals) who vide order-in-appeal dated 30-10-2009, set aside the penalty on the ground that the respondent is eligible for waiver of penalty in terms of the provisions of section 80 of the Finance Act, 1994. Held that- there was no reason for non-payment of service tax by due date, I hold that the respondent would be liable for penalty for period from 5-10-2005. However, looking to the circumstances of the case, I hold that penalty of Rs. 100 per day for the period from 6-10-2005 onwards till the date of its payment will meet the ends of justice. In view of the above discussion, the impugned order is set aside and the order-in-original is restored with the above mentioned modification. The revenue s appeal is partly allowed.

Summary

Issues:
1. Imposition of penalty under section 76 for non-payment of service tax during a specific period.
2. Applicability of waiver of penalty under section 80 based on reasonable cause for failure to pay service tax.
3. Interpretation of legal provisions and precedents related to penalty imposition and waiver.

Analysis:

Issue 1: Imposition of penalty under section 76
The case involved a dispute regarding the imposition of a penalty under section 76 for the non-payment of service tax during a specific period. The respondent had challenged the levy before the Hon'ble Allahabad High Court, resulting in a stay on the collection of service tax. However, the High Court dismissed the writ petition on 12-8-2005. The respondent failed to pay the service tax even after the decision, leading to the imposition of a penalty by the Assistant Commissioner. The Commissioner (Appeals) later set aside the penalty, citing the provisions of section 80 of the Finance Act, 1994, which allows for the waiver of penalty if a reasonable cause for failure is proven. The Revenue filed an appeal against this decision.

Issue 2: Applicability of waiver of penalty under section 80
The key point of contention was whether there was a reasonable cause for the continued non-payment of service tax by the respondent after the decision by the Hon'ble Allahabad High Court. The Commissioner (Appeals) had waived the penalty under section 76, considering the challenge faced by the respondent in the legal proceedings. The respondent argued that they had consulted legal counsel and acted upon their advice, justifying the delay in payment. The Revenue contended that there was no valid reason for the non-payment after the High Court's decision, thus challenging the waiver of penalty.

Issue 3: Interpretation of legal provisions and precedents
The Tribunal analyzed the legal provisions of section 80, which mandate the waiver of penalty only in cases where a reasonable cause for failure is established. The Tribunal distinguished the present case from previous judgments cited by the respondent, emphasizing that the period of dispute and non-payment in this case extended beyond the final decision against the appellant. Additionally, the Tribunal clarified that the judgments cited by the respondent regarding the applicability of limitation periods for recovery of interest on duty were not directly relevant to the penalty imposition issue at hand. Ultimately, the Tribunal ruled that from October 2005 onwards, there was no valid reason for the non-payment of service tax, and imposed a modified penalty of Rs. 100 per day from 6-10-2005 until the payment date.

This detailed analysis of the issues involved in the legal judgment highlights the considerations made by the Tribunal in determining the imposition of the penalty and the applicability of the waiver provisions under section 80, providing a comprehensive overview of the case.