2015 (8) TMI 955 - AT - Service Tax

Penalty u/s 78 - assess had collected the service tax but failed to deposit the same with the Government account due to financial crisis - Held that - Assessee has discharged the entire service tax liability with interest. On a specific query from the Bench it was informed by the department that the entire amount of service tax has been discharged before issue of show-cause notice - invoking of Section 80 of Finance Act, was discretionary power used by adjudicating authority and recording reasonings for doing so. The appeal against the discretionary powers to set aside penalty is incorrect as the reasoning as recorded by the adjudicating authority are acceptable reason for invoking the provisions of Section 80 of the Finance Act, 1994 - Decided against Revenue.

Summary

Issues:
Revenue's appeal against dropping penalty under Section 78 of the Finance Act, 1994.

Analysis:
The appeal was filed by Revenue against the Order-in-Original dated 30.11.2010, specifically challenging the dropping of penalty under Section 78. Despite the respondent not being represented, the Tribunal proceeded with the appeal due to the narrow scope of the issue. Revenue contended that the respondent failed to discharge the service tax liability despite being informed, citing a case law to support the imposition of penalty under Section 11AC. However, upon reviewing the submissions and records, the Tribunal found the appeal lacked merit.

The adjudicating authority had set aside penalties imposed on the respondent after confirming the payment of service tax with interest, citing reasons such as incorrect computation of assessable value and delayed payments from clients. The authority noted that there was no deceitful intent on the part of the respondent and that the respondent promptly paid any shortfalls along with interest. Additionally, the authority invoked Section 80 of the Finance Act, exercising discretionary power supported by valid reasoning. The Tribunal upheld the authority's decision, emphasizing that the reasons provided were sufficient for invoking Section 80.

Overall, the Tribunal rejected the appeal, affirming the Order-in-Original's decision to drop the penalty under Section 78 of the Finance Act. The Tribunal found the respondent's actions did not warrant the imposition of penalties under the relevant sections, considering the circumstances and compliance efforts demonstrated.