2013 (5) TMI 368 - AT - Service Tax

Waiver of penalty - Due to financial hardship - Held that - Keeping in view the financial difficulties and the hardship expressed, the penalty to be reduced to 25% of the imposed amount. Appellant is directed to deposit the same within one month of receipt of this order and produce the challan before learned Adjudicating Authority within a fortnight thereof. If such compliance is made, the appellant shall get the benefit of concession in penalty otherwise the first appeal order shall stand confirm.

Summary

Issues:
Reduction of penalty under Section 76 of the Finance Act, 1994 based on financial difficulties and delay in tax deposit.

Analysis:

Issue 1: Penalty under Section 76 of the Finance Act, 1994

The appellant's counsel requested the waiver of penalty under Section 76, citing financial difficulties and the absence of deliberate breach in tax deposit. The counsel argued that the tax liability was eventually discharged, albeit with a delay, and that there was no intentional withholding of tax payments. The Departmental Representative acknowledged the tax and interest deposits made by the appellant. The tribunal noted the lack of mens rea in the show cause notice, indicating no deliberate intent to withhold tax amounts. Considering the financial hardships expressed, the tribunal exercised its discretion and reduced the penalty to 25% of the original amount, amounting to Rs. 3.18 lacs. The appellant was directed to deposit the reduced penalty within one month and provide the challan to the Adjudicating Authority within a fortnight. Failure to comply would result in the confirmation of the first appeal order.

Issue 2: Disposal of Appeal

In light of the above direction to reduce the penalty, the tribunal disposed of the appeal and stay application. The decision partially allowed the appeal, reflecting the reduction in penalty imposed. The judgment was pronounced in open court, concluding the proceedings.

This judgment showcases the tribunal's consideration of financial difficulties and lack of deliberate breach in tax payment while deciding on the penalty under Section 76 of the Finance Act, 1994. The reduction in penalty serves as a balance between enforcing compliance and recognizing genuine challenges faced by the appellant.