2010 (7) TMI 248 - AT - Service Tax

Waiver of penalty - under the head Picking & Cleaning Expenses on which the service tax has not been paid - after issuance of the show-cause notice, the appellant paid the service tax along with the interest - penalties under sections 76, 77 and 78 of the Finance Act, 1994 imposed - appellant being a small businessman and was not having any margin of profit in their business and was not aware of the service tax provisions - the benefit of section 80 of the Finance Act is to be given to the appellant as service tax being a new levy of tax Held that - penalty demand has been waived.

Summary

Issues:
Seeking waiver of penalty under sections 76, 77, and 78 of the Finance Act, 1994.

Analysis:
The case involved the appellant seeking waiver of penalties imposed under sections 76, 77, and 78 of the Finance Act, 1994. The revenue alleged that the appellant had not paid service tax on an amount received under the head "Picking & Cleaning Expenses." A show-cause notice was issued, and the appellant paid the service tax along with interest. The appellant contended that they were not contesting the service tax liability but sought waiver of penalties due to being a small businessman with no profit margin and lack of awareness of service tax provisions. The appellant argued that if they had paid the service tax, the credit would be available to the service receiver, leading to revenue neutrality. The appellant requested the benefit of section 80 of the Finance Act, citing the new levy of tax and their compliance with paying the service tax without protest.

The appellant's advocate emphasized that the appellant's lack of awareness of service tax provisions and their prompt payment of the service tax without protest warranted leniency in penalty imposition. The appellant's conduct of paying the service tax only after the show-cause notice was highlighted by the revenue, arguing that penalties were automatically leviable upon confirmation of service tax liability. The revenue suggested considering leniency due to the appellant's status as a small taxpayer.

After considering both parties' submissions, the Tribunal noted that the appellant did not contest the duty liability and focused solely on the penalty imposition under the Finance Act. The Tribunal acknowledged that the appellant, though not registered with the service tax department, promptly paid the service tax upon notification by the department. Citing the appellant's status as a small taxpayer and lack of awareness of service tax laws, the Tribunal applied a lenient view in line with previous judgments. Referring to a similar case, the Tribunal granted the benefit of section 80 of the Finance Act to the appellant, waiving the penalties imposed. The Tribunal emphasized the appellant's lack of knowledge regarding service tax laws and their small taxpayer status as grounds for granting penalty relief. Consequently, the appeal was allowed, and the penalties against the appellant were waived.