2010 (8) TMI 79 - AT - Service Tax

Penalty - The appellant had been called upon to pay the adjudged dues as programme producer . It was registered in the said category and collected service tax in the same category from its customers as evidence by the invoice available on records, but it did not remit said amount to exchequer. Thus the service tax and penalty demanded. Held - assesese made the payment with interest. In terms of letter and spirit of provisions of section 73, to pre-deposit 25% of minimum penalty u/s 78 was to be directed.

Summary

Issues:
Demand of service tax, imposition of penalties under sections 76, 77, and 78 of the Finance Act, 1994, waiver of pre-deposit and stay of recovery, interpretation of section 80 of the Finance Act, 1994, liability of the appellant to pay service tax, pre-deposit requirements under section 78, financial hardship considerations for extending the pre-deposit period.

Demand of Service Tax and Penalties:
The Appellate Tribunal found that the ld. Commissioner confirmed a demand of service tax exceeding Rs. 2.1 crores against the appellant for a specific period and imposed penalties under sections 76, 77, and 78 of the Finance Act, 1994. The penalties under sections 76 and 77 were quantified, but the penalty under section 78 was the primary point of contention. The appellant, registered as a 'programme producer,' collected service tax from customers but did not remit it to the exchequer. The Commissioner's order included demands for service tax and proposed penalties, leading to the dispute adjudication.

Waiver of Pre-Deposit and Stay of Recovery:
The appellant paid the entire service tax amount with interest before the case adjudication. The appellant's counsel requested a waiver of pre-deposit and a stay on penalty recovery, citing entitlement to the benefit of section 80 of the Finance Act, 1994. The JCDR opposed the plea, highlighting the appellant's conduct of collecting service tax from customers but not paying it to the revenue. Both parties referenced section 73 of the Finance Act during arguments.

Liability to Pay Service Tax:
Upon reviewing the submissions, the Tribunal observed that the appellant voluntarily registered as a 'programme producer' and collected service tax from customers without remitting it to the exchequer. The appellant's liability to pay service tax was evident, even though the amount was paid with interest before dispute adjudication. The minimum penalty under section 78 is equivalent to the service tax amount, extendable to twice that sum. The Tribunal outlined the pre-deposit requirements under section 78, emphasizing the appellant's obligation to deposit approximately 25% of the penalty imposed.

Financial Hardship Considerations:
The Tribunal directed the appellant to pre-deposit around Rs. 50 lakhs, approximately 25% of the penalty, within four weeks. The appellant's counsel requested an extension citing financial hardships, but the Tribunal noted the absence of such claims in the stay application and thus denied an extension. The decision was based on the provisions of section 73 and the appellant's circumstances, emphasizing compliance with pre-deposit requirements without considering financial difficulties as a valid reason for an extension.