2015 (7) TMI 138 - AT - Service Tax

Penalty u/s 76 - business auxiliary services - Held that - Even though there was no claim made earlier for application of Section 80, I find that this is a case where one of the partners even though was ignorant of law, has fulfilled the obligation even before issuance of show-cause notice and it can also be seen that the concern was a partnership firm. Having regard to facts and circumstances and the approach of the assessee, I consider that this is a fit case for invocation of provisions of Section 80 of Finance Act 1994 and accordingly, the penalties imposed on the appellants are waived by invoking the provisions of Section 80 of Finance Act 1994. - Decided in favour of assessee.

Summary

Issues:
1. Appellant's liability for service tax and penalty.
2. Invocation of Section 80 of the Finance Act 1994 for penalty waiver.

Issue 1: Appellant's liability for service tax and penalty:
The appellant, a partnership concern providing business auxiliary services, was involved in fabrication and job work. The central excise work was previously managed by a partner who later left the partnership. Subsequently, proceedings were initiated, resulting in a demand for service tax and penalty amounting to &8377; 4,12,979 for the period from April 2006 to September 2006. The appellant claimed to have paid &8377; 4,00,000 initially and another &8377; 1,06,074 later. The verification confirmed these payments, with a total of &8377; 5,06,074 appropriated in the order-in-original. Despite the partner's departure and lack of awareness of procedures, the appellant had paid the entire tax amount, including interest, even before the show-cause notice was issued.

Issue 2: Invocation of Section 80 of the Finance Act 1994 for penalty waiver:
The appellant sought leniency in penalty imposition under Section 80 of the Finance Act 1994, citing the circumstances of early tax payment before the notice was served, demonstrating bona fide intentions. The appellant's counsel argued for penalty waiver based on these grounds. However, the respondent's representative contended that ignorance of the law does not justify leniency, and there was no prior plea for Section 80 application. Despite the absence of an earlier claim for Section 80, the tribunal acknowledged the appellant's fulfillment of tax obligations before the show-cause notice and the partnership nature of the concern. Considering the facts and the appellant's proactive approach, the tribunal deemed it appropriate to invoke Section 80 of the Finance Act 1994, leading to the waiver of penalties imposed on the appellants.

This judgment from the Appellate Tribunal CESTAT BANGALORE highlights the appellant's liability for service tax and penalty, along with the invocation of Section 80 of the Finance Act 1994 for penalty waiver. The tribunal recognized the appellant's proactive tax payment despite a partner's departure and lack of prior plea for leniency, ultimately deciding in favor of penalty waiver under Section 80 based on the circumstances and the appellant's actions.