2010 (3) TMI 568 - AT - Service Tax

Cenvat Credit - the Commissioner (Appeals) has set aside the penalty on the ground that there is no failure on the part of the respondent. Held that - since revenue did not produce any evidnce contrary to impugned order, same was to be upheld.

Summary

Issues:
1. Imposition of penalty under sections 76 and 77 of the Finance Act, 1994.
2. Allegation of late filing of ST-3 return and non-payment/short payment of service tax.
3. Applicability of penalty under section 77 and section 76 of the Finance Act, 1994.
4. Consideration of reasonable cause for failure to pay service tax.

Analysis:
The case involved an appeal against the imposition of penalties under sections 76 and 77 of the Finance Act, 1994. The appellant contended that there was no failure on their part as they eventually paid the Service Tax amount after persuasion by the Range Office. The Commissioner (Appeals) set aside the penalty under section 76, citing no allegation of non-payment/short payment of service tax in the show-cause notice. The respondent, on the other hand, argued that the absence of a demand in the notice indicated no case for non-payment of service tax, supporting the decision of the Commissioner (Appeals) to set aside the penalty under section 76.

The Tribunal noted that the case was remanded to the Commissioner (Appeals) for a fresh hearing as per the provisions of section 73 of the Finance Act, 1994. The primary allegation against the respondent was the late filing of the ST-3 return, leading to the imposition of a penalty under section 77. The Commissioner (Appeals) upheld the penalty under section 77, which the respondent did not contest. However, the penalty under section 76 was set aside based on the lack of evidence regarding non-payment/short payment of Service Tax. The Tribunal emphasized that section 80 of the Act provides for the non-imposition of penalties if the assessee proves a reasonable cause for the failure to comply.

Ultimately, the Tribunal found no infirmity with the Commissioner (Appeals) impugned order, as there was no failure on the part of the appellant to pay the service tax. Since the appellant did not present any evidence contradicting the lack of failure, the Tribunal dismissed the revenue's appeal and disposed of the Cross Objection accordingly. The judgment highlighted the importance of proving a reasonable cause for any failure to meet tax obligations under the relevant provisions of the Finance Act, 1994.