2009 (10) TMI 454 - AT - Service Tax

Penalty- Appellant is engaged in providing security services. Dispute related to the short payment of service tax. Differential Service Tax amount only Rs. 2,945/- while penalty under section 76 amonting to Rs. 87,799. Held that-fit case to invoke section 80.

Summary

Issues:
1. Failure to file half yearly returns for specific periods.
2. Short payment of service tax.
3. Applicability of penalty under Section 76 of Finance Act, 1994.
4. Invocation of provisions under Section 80 of Finance Act, 1994.
5. Consideration of the company's size and intention to evade tax.

Analysis:

Issue 1: Failure to file half yearly returns
The appellant, engaged in providing security services, failed to file half yearly returns for the periods ending March 2005 and September 2005. Subsequently, after a departmental letter on 2-12-2005, the returns were filed on 19-12-2005 and for the period ending March 2006 on 4-7-2006. The delay in filing returns was acknowledged, leading to the discovery of a short payment of service tax amounting to Rs. 2,835.

Issue 2: Short payment of service tax
Upon verification, it was established that there was indeed a short payment of service tax by the appellants. The appellant promptly paid the outstanding amount of Rs. 2,835 on 23-1-2007, following the issuance of a show cause notice but before the adjudication order was released.

Issue 3: Applicability of penalty under Section 76
The appellant's representative argued that as per Section 73(3), once the tax is paid with interest, no further penalty should be levied. The appellant's small size and lack of intention to evade tax were emphasized. In contrast, the Departmental Representative highlighted the delayed filing of returns and the acknowledgment of the short payment only after the show cause notice.

Issue 4: Invocation of Section 80 of Finance Act, 1994
After considering the submissions, the Tribunal invoked the provisions of Section 80 of the Finance Act, 1994. The Tribunal took into account the small amount of differential duty, Rs. 2,945, compared to the penalty of Rs. 87,799 under Section 76. The total value of taxable service, Rs. 35,00,000, was also considered, leading to a lenient view under Section 80 due to the appellant's size and the prompt payment of tax.

Issue 5: Consideration of company's size and intention
The Tribunal, in its analysis, acknowledged the appellant's status as a small firm and the absence of intent to evade tax. The Tribunal considered the proportion of the short payment in relation to the total taxable service value and the appellant's actions in paying the tax promptly, ultimately leading to a decision in favor of the appellant under Section 80 of the Finance Act, 1994.

This detailed analysis of the judgment highlights the issues of failure to file returns, short payment of tax, penalty imposition, and the application of relevant provisions under the Finance Act, 1994, considering the appellant's circumstances and actions.