2015 (11) TMI 1417 - AT - Service Tax

Levy of Penalty u/s 76 77 19, 90, 000/-. The mistaken belief now expressed by him therefore has no basis. - The receipts for the years 2007-08 and 2008-09 were recovered from him in the form of computerized sheets to which there is no denial. - Decided against assessee.

Summary

Issues:
1. Interpretation of Section 78 proviso regarding penalty calculation.
2. Whether service tax paid before the issue of show cause notice should be considered for penalty calculation.

Analysis:

Issue 1:
The appellant argued that as per Section 78 proviso, the penalty should be 25% of the service tax determined under Section 73(2) if paid within 30 days of the order. The appellant contended that since they paid a portion of the tax before the show cause notice, the penalty should be calculated on the remaining amount. However, the tribunal noted that the total service tax determined by the officer includes all payable amounts, regardless of pre-payment. The tribunal emphasized that even if tax is partially paid before the notice, it must still be confirmed under the order. The tribunal rejected the appellant's argument, stating that the tax amount already paid should not be excluded from penalty calculation.

Issue 2:
The tribunal compared the present case with a previous High Court judgment involving a different issue. In the previous case, confusion existed over the taxable service, unlike the current scenario where the appellant was previously registered and familiar with service tax regulations. The tribunal highlighted that the appellant's awareness of the law was evident from their prior registration, which they later surrendered based on incorrect assumptions about their receipts. The tribunal found no merit in the appellant's appeal, emphasizing the appellant's awareness of their obligations under the Service Tax law and dismissing the appeal.

In conclusion, the tribunal dismissed the appeal, emphasizing that the appellant's prior registration and awareness of tax obligations contradicted their claimed belief about their receipts. The tribunal upheld the penalty calculation based on the total service tax determined, including amounts paid before the show cause notice, as per Section 78 proviso.