2013 (11) TMI 1252 - AT - Service Tax

Short Payment of Service Tax Exemption from Penalty u/s 76 - The total demand of service tax and education cesses and the total amount appropriated towards such demand - Obviously, the duty amount survived as a demand yet to be honoured by the assessee - Therefore, the exemption from penalty under Section 76 claimed by the learned counsel on the basis of Section 73(3) of the Act read with the second explanation thereto is prima facie untenable - Such exemption cannot be claimed where a part of the demand of service tax survives and the assessee has prayed for setting aside the entire demand of service tax. Waiver of Pre-deposit - The assessee had contested the entire demand confirmed against them by the adjudicating authority assessee submitted that the entire tax liability was conceded - Even after this, the fact remains that an amount remained to be paid towards service tax and education cesses. In this scenario, one has to fall back upon Section 76 of the Finance Act - the quantum of penalty was not forthcoming in the order - The impugned order only says that the assessee should pay a penalty of Rs. 200/- per day or at the rate of 2% of service tax per month, whichever was higher, till the date of actual payment of the outstanding dues of service tax - there will be waiver of pre-deposit and stay of recovery as prayed for.

Summary

Issues:
1. Short-payment of service tax detected in ST-3 Returns for the period October 2008 to March 2009.
2. Department issued a show-cause notice proposing to appropriate payments towards demands of service tax, interest, and penalty.
3. Adjudication of the dispute led to an order demanding service tax, interest, and imposing a penalty.
4. Total demand of service tax and education cesses, amount appropriated, and remaining demand.
5. Exemption from penalty under Section 76 claimed by the appellant.
6. Assessment of penal liability under Section 76 of the Finance Act.
7. Lack of clarity on the quantum of penalty in the impugned order.

Analysis:
The case involved the detection of short-payment of service tax in the ST-3 Returns for a specific period. The department issued a show-cause notice proposing to appropriate payments towards service tax demands, interest, and penalty under Section 76 of the Finance Act. The adjudication resulted in an order demanding service tax, interest, and imposing a penalty on the appellant. The total demand of service tax and education cesses was identified, with an amount already appropriated, leaving a remaining demand to be honored by the assessee. The appellant claimed exemption from penalty under Section 76 based on certain provisions, which was deemed prima facie untenable due to the remaining demand. The appellant contested the entire demand but eventually conceded the tax liability, leaving a small amount unpaid. The extent of penal liability under Section 76 was questioned, as the impugned order lacked clarity on the quantum of penalty, only mentioning a daily or monthly rate until the outstanding dues are paid. Consequently, the waiver of pre-deposit and stay of recovery was granted in light of the circumstances. The judgment highlighted the need for a clear determination of the penalty amount under Section 76 in such cases to ensure transparency and proper application of the law.