2013 (10) TMI 638 - AT - Service Tax

Penalty u/s 76 - Held that - Ongoing through the Annual Report submitted by the appellant it is found that the appellant has made huge losses as claimed. Moreover it is also found that there are lots of dues from the customers to the appellant. Under these circumstances some lenient view is warranted as regards penalty imposed under Section 76 which is the only subject matter of dispute in this case at present - Therefore if the appellant deposits an amount of Rs. 5, 00, 000 within six weeks it would be sufficient towards predeposit.

Summary

Issues:
Late payment of service tax, financial difficulties faced by the appellant, waiver of predeposit, penalty under Section 76.

Analysis:
The appellant defaulted in paying service tax of over Rs 1.68 crores between April and September 2010, leading to the initiation of proceedings by a show-cause notice in February 2011. Despite the delayed payment, the entire service tax amount was eventually paid by October 2011, along with the interest. The appellant attributed the late payment to severe financial challenges, citing significant outstanding dues from major corporations and substantial losses incurred during the relevant financial year. The appellant sought a waiver of predeposit due to the financial crisis they faced.

The learned advocate representing the appellant highlighted the financial difficulties faced by the appellant, emphasizing the substantial losses incurred and the challenges posed by maintaining a large inventory to fulfill orders. On the other hand, the learned A.R. representing the department opposed the waiver, pointing out that the appellant had collected the service tax but failed to remit it promptly. The A.R. argued that no leniency should be granted as the appellant only paid the outstanding amounts after the issuance of the show-cause notice.

After considering the arguments presented by both parties and reviewing the appellant's Annual Report, the tribunal acknowledged the significant losses reported by the appellant and the outstanding dues from customers. In light of these circumstances, the tribunal deemed it appropriate to take a lenient view regarding the penalty imposed under Section 76, which was the primary issue under dispute. Consequently, the tribunal directed the appellant to deposit Rs. 5,00,000 within six weeks. Upon compliance with this requirement, the tribunal granted a waiver of predeposit and ordered a stay against recovery during the appeal's pendency.