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2010 (4) TMI 200 - AT - Service TaxPenalty- Penalty of Rs.2, 46, 271/- imposed on the assessees herein for delayed payment of service tax during the period February to October 2007 is challenged by the assessees on the ground that they had reasonable cause for delay namely (i) non-availability of funds on due dates; (ii) shortage of funds due to TDS and (iii) change of staff dealing with service tax. Held that- The shortage of funds due to deduction of TDS or change of staff are not justifiable ground for the simple reason that Service tax on the services rendered by them was not required to be paid by them overnight to catch their administration gasping. Hence the reasons given by the assessee can not be considered as reasonable cause for delayed payment of service tax. Thus there is no leniency under section 80 of the Act.
Issues:
Challenge to penalty imposed for delayed payment of service tax. Analysis: The judgment revolves around the challenge to a penalty of Rs.2,46,271/- imposed on the assessees for delayed payment of service tax between February to October 2007. The assessees contended that they had reasonable cause for the delay, citing reasons such as non-availability of funds, shortage of funds due to TDS, and change of staff dealing with service tax. The Vice-President, after hearing both sides, found that none of the reasons presented by the assessees constituted a reasonable cause to warrant shelter under Section 80 of the Finance Act, 1994. The Commissioner had provided a detailed finding in the impugned order, highlighting the inadequacy of the reasons given by the assessees for the delayed tax payment. The Vice-President emphasized that the utilization of service tax collected for day-to-day business purposes was a violation of law and not permissible. The shortage of funds due to TDS or staff changes was deemed unjustifiable, as the service tax was not required to be paid overnight, and taxes should have been remitted on the due dates. Consequently, the Vice-President upheld the impugned order regarding the imposition of the penalty and dismissed the appeal. The judgment underscores the importance of adhering to tax payment deadlines and the inadmissibility of using collected service tax for purposes other than remittance to the government.
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