2015 (4) TMI 1004 - AT - Service Tax

Penalty u/s 78 - waiver of penalty u/s 80 demand of differential service tax leviable on sugarcane transportation charges and inward freight charges - Held that - During the material period i.e. upto August 2008, the issue was being agitated and the appellant had also taken a plea that due to financial crisis they were not able to pay the balance amount on transportation of sugarcane and inward transportation of stores material. We find that in this case, non-discharge of service tax liability is not due to ulterior motive but due to financial difficulties that was faced by the appellant. In our view it is a fit case for us to invoke the provisions of Section 80 of the Finance Act, 1994 and we do so. By invoking the provisions of Section 80 we set aside the penalty imposed by the adjudicating authority and upheld by the first appellate authority while upholding the confirmation of demand of service tax liability and the interest thereof. - Decided partly in favour of assessee.

Summary

Issues involved:
Discharge of service tax liability on sugarcane transportation charges during 2006-07 to 2008-09, imposition of penalty under Section 78 of the Finance Act, 1994.

Analysis:
The appeal was against Order-in-Appeal No. AGS(46)134/2010 dated 18.03.2010. The appellant did not appear, but the appeal was considered with the assistance of the departmental representative. The issue revolved around the improper discharge of service tax liability on sugarcane transportation charges. The appellant had not paid the full tax amount, leading to a show-cause notice for demanding the differential service tax, interest, and penalty. The adjudicating authority and the first appellate authority upheld the demands and penalty, which led to this appeal.

The main contention in the appeal was the imposition of penalty under Section 78 of the Finance Act, 1994. The appellant argued that the penalty should be set aside as they had paid the entire amount before the show-cause notice was issued. However, the departmental representative contended that the full amount was not paid before the notice, and the appellant did not strongly contest this issue before the first appellate authority.

Upon reviewing the submissions and records, it was noted that the appellant did not contest the issue on merits and had paid the differential service tax along with interest. The first appellate authority confirmed the payment and even acknowledged the challans submitted as evidence. The non-discharge of service tax liability was attributed to financial difficulties faced by the appellant rather than any ulterior motive. Consequently, invoking Section 80 of the Finance Act, 1994, the penalty under Section 78 was set aside, while the demand for service tax liability and interest were upheld.

In conclusion, the appeal was disposed of with the penalty being overturned under Section 80, while confirming the service tax liability and interest.