2014 (12) TMI 590 - AT - Service Tax

Imposition of penalty - Commercial training and coaching centre service - Short payment of tax - Held that - Inasmuch as ST-3 Returns was yet to be filed by the appellant by 25th October 2008, the detection of short payment by the officers on 14th October 2008 is premature detection. The appellants have given a plausible explanation of short payment by submitting that inasmuch as entries were not made in the computers and the data was yet to be entered, there was no mala fide on their part not to pay service tax. The said reconciliation of statement would have definitely been done by them and at the time of filing of ST-3 Returns. Further I also find that the entire case of the Revenue is based upon the scrutiny of the statutory records maintained by the appellant in which case the appellant was not in a position to evade any service tax. Accordingly, I am of the view that no penalty is imposable on the appellant. - Decided in favour of assessee.

Summary

Issues:
1. Challenge to penalty amount imposed on the service provider for short payment of service tax.
2. Premature detection of short payment before filing ST-3 Returns.
3. Validity of penalty imposition based on the statutory records and reconciliation explanation.

Analysis:
1. The appellant, a service provider in the category of commercial training and coaching center, was found to have deposited less service tax for the period May 2008 to September 2008. The appellant acknowledged the short deposit and promptly paid the service tax along with interest. However, penalties were imposed under various sections of the Finance Act, leading to the present appeal challenging only the penalty amount.

2. The appellant argued that the detection of short payment on 14th October 2008, before the filing of ST-3 Returns due by 25th October 2008, was premature. They contended that the short payment was due to incomplete data entry in the software, and they would have reconciled the figures before filing the returns. The appellant asserted that there was no intention to evade service tax, and the reconciliation would have been completed at the time of filing the returns, thus requesting the penalty imposition to be set aside.

3. The appellate tribunal examined the case and agreed with the appellant's submission. It was noted that the detection of short payment before filing the ST-3 Returns was premature, and the appellant had a plausible explanation for the discrepancy. The tribunal found that the appellant's records showed no intent to evade service tax, and the reconciliation would have been completed during the return filing process. Based on these findings, the tribunal concluded that no penalty should be imposed on the appellant. Consequently, the demand and interest were confirmed, while the penalties imposed under various sections were set aside, resulting in the disposal of the appeal in favor of the appellant.