2012 (10) TMI 341 - AT - Service Tax

Penalty under Sections 76 and 77 Held that - No case of suppression of facts - they are small businessman and not in a position to appoint Accountant and other staff to look after the day to day work of Service Tax and due to this the payment was made late - appellant is a small businessman and proprietary concern and first time in the business, and paid the Service Tax on its own before being pointed out. Therefore, it is a reasonable ground for not imposing any penalty under Sections 76 and 77 - in favor of assessee

Summary

Issues:
Appeal against penalty under Sections 76 and 77 of the Finance Act, 1994 for failure to pay Service Tax and file ST-3 returns on time.

Analysis:
The appellant, a proprietary concern, challenged penalties imposed for late payment of Service Tax and filing of returns. The appellant argued that being a small businessman, they lacked resources to hire staff for tax compliance. They contended that the Service Tax and returns were filed before the show-cause notice, citing a Tribunal decision in support. The respondent argued that repeated late payments justified the penalties, referencing a Supreme Court decision. The Tribunal noted that the appellant, a first-time businessman, paid the tax independently before being notified. No suppression of facts was found, and the appellant's financial constraints were considered valid reasons for the delays. The Tribunal referenced a similar case where penalties were not imposed due to early compliance. The Supreme Court decision cited by the respondent was deemed irrelevant due to the absence of fraud allegations in the show-cause notice. Consequently, the Commissioner's order upholding the penalties was set aside, and the appeal was allowed.