2012 (11) TMI 85 - AT - Service Tax

Interest on delayed payment of service tax Held that - Appellant has admitted the liability to pay service tax, which he has recovered from the customers, along with interest thereon - there is a delay in payment of service tax, the appellant is liable to pay interest thereon on the defaulted payment under Section 75 of the Finance Act, 1994. Interest liability will accrue from the due date for the payment of service tax till such time the payment is actually made. Penalty - penalties have been imposed under Section 76 for delay in payment of service tax, under Section 77 for filing of returns belatedly and under Section 78 for suppressing the fact of receipt of service tax from the customer Held that - Penalty under one of the said provisions will suffice considering the fact that the appellant is a small service provider - orders passed by the lower authorities, the option/facility for paying penalty @ 25% of the penalty determined within a period of 30 days from the date of receipt of the order was not been give - order passed is incorrect as far as imposition of penalty is concerned - appellant is liable to penalty under Section 78 of the Finance Act equal to the service tax defaulted. However, the said penalty shall stand reduced to 25%, if the said liability is also discharged within 30 days from the date of receipt of this order along with the balance of service tax due and interest liability thereon as discussed above. Penalty under Section 77 is upheld.

Summary

Issues:
1. Condonation of delay in filing appeals.
2. Default in payment of service tax by the appellant.
3. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.

Condonation of Delay:
The appellant sought condonation of an 80-day delay in filing appeals due to the appellant's illness and medical treatment. The tribunal, considering the reasons provided, condoned the delay in filing the appeals in both cases.

Default in Payment of Service Tax:
The appellant, a service provider, failed to pay service tax to the exchequer despite recovering it from customers. The tribunal upheld the service tax demand and interest liability, given the admitted liability by the appellant. The appellant was directed to pay interest on the defaulted payment under Section 75 of the Finance Act, 1994, from the due date until the actual payment.

Imposition of Penalties:
Penalties were imposed under Sections 76, 77, and 78 of the Finance Act, 1994. The tribunal upheld the penalty under Section 78 for suppressing the receipt of service tax from customers, considering the appellant's status as a small service provider. The penalty under Section 76 was set aside, and the penalty under Section 78 was upheld. However, it was noted that the lower authorities did not provide the option to pay a reduced penalty of 25% within 30 days. The tribunal held that the appellant must pay the penalty under Section 78 equal to the defaulted service tax, which would be reduced to 25% if paid within 30 days of the order. The penalty under Section 77 for late filing of returns was also upheld.

The appeals were disposed of with the appellant being liable to pay the penalties under Section 78 and Section 77, subject to the conditions specified by the tribunal.