2006 (7) TMI 66 - AT - Service Tax

Penalty(Service Tax)-Alleged that assessee were delayed in payment of tax liability -Penalty enhanced to minimum amount prescribed by the revisionary authority

Summary

Issues:
1. Service Tax non-payment and late filing of returns.
2. Imposition and enhancement of penalty under Sections 76 and 77 of the Finance Act.

Analysis:
1. The case involved an appeal regarding Service Tax non-payment and late filing of returns by the assessee. The Assistant Commissioner had issued Show-Cause-Notices for contraventions of Sections 68 and 70 of the Act. The adjudication resulted in confirmation of Service Tax, interest, and penalties. The Commissioner later called for record and proposed an enhancement of penalty amount, leading to the appeal before the Tribunal.

2. The main contention was that the impugned order was unsustainable as the Service Tax and interest had been paid before the Show-Cause-Notice issuance. The appellant argued against the enhancement of penalty, citing case laws to support the absence of mala fide intention and discretion in penalty imposition. The appellant highlighted that the penalty under Section 76 of the Finance Act was not mandatory, emphasizing the lack of mala fide intention in payment delays.

3. The Department argued that the Commissioner had the power, under Section 84 of the Finance Act, to impose the penalty as provided under Section 76, asserting its mandatory nature. However, the Tribunal observed that the assessee had made payments in a timely manner before the Show-Cause-Notice and penalty confirmation. The Tribunal noted that the Commissioner's re-opening of proceedings without evidence of deliberate wrongdoing or ignorance by the assessee was unwarranted. The Tribunal found legal infirmity in the imposition of an enhanced penalty and set it aside, ultimately allowing the appeal and disposing of the stay application.