2012 (9) TMI 339 - AT - Service Tax

Non registration under maintenance and repairing service under Clause (zzg) and erection, commissioning and installation service under Clause (zzd) - Revenue appeal against non imposition of penalty - Held that - As the Appellant could not take the registration and pay the Service Tax under bona fide belief that due to changes introduced in the above-mentioned services from time to time and on being pointed out, they obtained the Service Tax Registration and paid the dues - As they also paid the Service Tax from their own pocket on not receiving anything from their clients there was no intention on their part not to pay the Service Tax within time - as the cause explained by the Appellant not to follow the provisions of the Finance Act, 1994 is reasonable no penalty u/s 76 is levied in view of the provisions of Section 80 - in favour of assessee.

Summary

Issues:
- Appeal against imposition of penalty under Section 78 of the Finance Act, 1994 for non-payment of Service Tax.
- Interpretation of Section 80 of the Finance Act, 1994 regarding reasonable cause for failure to pay Service Tax.
- Consideration of belated registration and payment of Service Tax as a defense against penalty imposition.

Analysis:
1. Appeal against penalty imposition: The Appellant filed an Appeal against the Order-in-Appeal setting aside the Order-in-Original imposing penalty for non-payment of Service Tax. The dispute arose from the Appellant's activities related to maintenance, repair, and installation services falling under specific clauses of Section 65(105) of the Finance Act, 1994. The Adjudicating Authority confirmed the Service Tax demand but did not impose a penalty. However, the Commissioner (Appeals) imposed a penalty equal to the Service Tax demand, leading to the present Appeal.

2. Interpretation of Section 80: The Appellant contended that due to changes introduced in taxability provisions from 2003 to 2006, they believed their services were not liable for Service Tax during the period in question. They argued that their failure to pay tax was due to a reasonable cause under Section 80 of the Finance Act, 1994, which provides for penalty waiver if a reasonable cause is proven for the failure. The Appellant highlighted their compliance efforts post-identification of the tax liability, including obtaining registration, paying dues, and cooperating with authorities.

3. Belated registration as a defense: The Revenue argued against waiving the penalty, citing the Appellant's belated registration and alleged attempts to evade tax payments. The Revenue relied on a judgment from the Punjab and Haryana High Court to support their stance. In response, the Appellant's representative emphasized that the registration delay was not intentional tax evasion, as evidenced by their subsequent actions of paying the due amounts, including interest, from their own funds.

4. Judgment and Conclusion: The Tribunal, after considering submissions and records, found merit in the Appellant's argument. It noted the Appellant's genuine belief regarding the tax liability and their subsequent compliance efforts upon realization of the same. The Tribunal agreed that the Appellant had a reasonable cause for their failure to pay tax on time, as per Section 80 of the Finance Act, 1994. Consequently, the Tribunal held that the penalty imposition was unwarranted and set aside the Commissioner (Appeals) Order, allowing the Appeal with any consequential relief as per law.