2009 (10) TMI 278 - AT - Service Tax

Banking and other financial services- The appellant is registered under the category of Banking and Financial Services. It was alleged by the Department that the appellant has failed to pay service tax on due dates and it was also alleged that the appellant has failed to file ST-3 Return. In view of these contraventions penalty under sections 76 and 77 and late fee under section 70 of the Finance Act were proposed and the same were confirmed. Held that- the appellant collected the service tax from their customers and failed to deposit the same within the time with the department and also not filed the Service Tax Return which are in contravention of the provisions of the Finance Act. For that the appellant is liable for penal action and the lower authorities has rightly imposed penalty on the appellant.

Summary

Issues:
Confirmation of penalties under sections 76 and 77 and late fee under section 70 of the Finance Act, 1994.

Analysis:
The appellant, registered under Banking and Financial Services, failed to pay service tax on due dates and file ST-3 Return, leading to proposed and confirmed penalties under sections 76 and 77 and late fee under section 70 of the Finance Act. The appeal was filed against these penalties. The appeal was listed for admission due to the amount involved being less than Rs.50,000. Despite no appearance by the appellant, the learned SDR representing the revenue argued that the penalties were mandatory under section 76 and amounted to Rs. 20,938, with an additional penalty of Rs. 9,000. The appellant contended that they considered themselves exempt under Circular No. 6/2005 due to turnover being below Rs. 4,00,000 and Rs. 8,00,000 for the financial year, hence did not deposit the collected service tax with the revenue department. However, the Tribunal noted that collecting service tax and failing to deposit it within the prescribed time, along with not filing the Service Tax Return, constituted a grave error. Citing precedent, the Tribunal held that even if turnover is below taxable limits, failure to deposit collected service tax is a serious offense warranting penal action equivalent to the penalty amount. Consequently, the Tribunal confirmed the penalties imposed on the appellant and rejected the appeal, also disposing of the stay petition filed by the appellant.