2010 (4) TMI 525 - AT - Service Tax

Penalty - The original Adjudicating Authority while confirming the demand for Service Tax invoked the extended period waived penalty under sections 76 77 and 78 of the Finance Act 1994. Commissioner revised said order and imposed penalty on assessee holding that once extended period was invoked suppression of facts with intention to evade duty was said to have been established and in such a situation adjudicating authority should not have waived penalty u/s 80. Held that- since assessee did not register itself and pay service tax in view of advice given by its association there was nothing wrong in view taken by adjudicating authority.

Summary

Issues:
1. Invocation of extended period for demand of Service Tax.
2. Imposition of penalty under sections 76, 77, 78 of the Finance Act, 1994.
3. Review by Commissioner under section 84 of the Finance Act, 1994.
4. Interpretation of penalty provisions in cases of suppression of facts.
5. Applicability of Circular issued by the Board regarding penalty payment.

Analysis:

1. The appeals involved the same issue of confirming the demand for Service Tax and invoking the extended period, leading to the waiver of penalty under sections 76, 77, and 78 of the Finance Act, 1994 by the original Adjudicating Authority. However, the Commissioner reviewed this decision under section 84 of the Finance Act, 1994 and imposed penalties under the mentioned sections, arguing that suppression of facts with intent to evade duty was established when the extended period was invoked, making the waiver of penalty inappropriate.

2. The learned SDR supported the Commissioner's decision by citing relevant case laws and a Circular issued by the Board. She argued that payment of cash before the issue of show-cause notice should not be a ground for penalty waiver and that failure to furnish details to the department could lead to the imposition of penalties under section 77. The Circular highlighted the requirement to pay a penalty of 25% in accordance with the provisions of section 73.

3. The Tribunal considered the submissions and found that the appellants had paid the Service Tax and interest before the issuance of the show-cause notice, based on advice from the Cab Operators Association. The association had advised them to wait as they were pursuing the matter. The Tribunal noted that the appellants did not register themselves or pay the Service Tax until it was proposed to be levied on the rent-a-cab service. Given this context, the original Adjudicating Authority's lenient view was deemed appropriate. The Tribunal emphasized that section 80 of the Finance Act did not exclude cases of evasion of Service Tax by suppression or misstatement when invoking the extended period for waiving penalties. Therefore, it was not necessary to impose penalties in every case where the demand for Service Tax was confirmed and the extended period was invoked. Consequently, the Tribunal found the Commissioner's view unsustainable and allowed the appeals with consequential relief to the appellants.