2009 (12) TMI 447 - AT - Service Tax

Penalty - There is a demand of Service Tax amounting to Rs. 94,157 along with interest on GTA services during the period from January, 2005 to 24-2-2006. The respondent is a manufacturer of soap and they have imported crude palm oil at concessional rate of duty and brought the said consignment engaging the services of transporters. By a deemed provision, the respondents were required to pay service tax. During the investigation the assessee took registration and paid service tax. Commissioner (Appeals) in view of facts that levy of tax on GTA was at initial stage and there was confusion about person who has to actually pay service tax thus section 80 invoked and set aside the penalty. Held that - there is no interfere with the findings of Commissioner (Appeals).

Summary

Issues:
Appeal against order setting aside penalties under sections 76, 77, and 78 of the Finance Act, 1994.

Analysis:
1. The appeal was filed by the Department challenging the order of the Commissioner (Appeals) setting aside penalties imposed under sections 76, 77, and 78 of the Finance Act, 1994. The case involved a demand for Service Tax on GTA services from January 2005 to February 2006. The respondent, a soap manufacturer, imported crude palm oil at a concessional duty rate and used transport services, triggering a deemed provision for service tax payment. The original authority confirmed the service tax and imposed penalties totaling Rs. 94,157. However, the Commissioner (Appeals) granted relief under section 80 of the Finance Act, citing the appellant's lack of awareness of service tax procedures during the initial levy period and prompt payment of service tax and interest upon registration as a service tax assessee.

2. The Commissioner (Appeals) considered the appellant's submission regarding their unfamiliarity with service tax rules during the initial levy period and their timely payment of service tax and interest before the issuance of a show-cause notice. Citing section 80 of the Finance Act, the Commissioner found that the appellant had shown reasonable cause for the delayed payment, thus warranting a waiver of the penalties imposed under sections 76, 77, and 78. The Commissioner noted that the confusion surrounding the payment of service tax for goods transport agency services at the beginning of the levy further justified invoking section 80 to set aside the penalties.

3. The Tribunal upheld the Commissioner (Appeals)' decision, emphasizing that the discretion exercised in setting aside the penalties under section 80 of the Finance Act was reasonable given the circumstances of the case. The Tribunal found no valid reasons presented by the Department in their appeal to challenge the Commissioner's findings. Consequently, the Tribunal rejected the Department's appeal, affirming the decision to set aside the penalties imposed under sections 76, 77, and 78 of the Finance Act, 1994.