2016 (6) TMI 409 - AT - Service Tax

Imposition of penalty - Section 76 of the Finance Act, 1994 - default in payment of service tax - paid afterwards with interest - manpower recruitment or supply agency service - no suppression or intention to evade tax - tax collected had not been paid - Held that - the appellant has produced documents showing that his mother was hospitalized for serious ailment and that he was going through utter financial crisis. In the judgments relied by the appellant, the penalty under Section 76 has been set aside when service tax along with interest was paid after pointing out by department. Therefore, by following the dictum laid in the judgments of Tribunal in the case of Vista Infotech Bangalore Vs. CST, Bangalore 2009 (8) TMI 289 - CESTAT, BANGALORE , and the decision of Karnataka High Court in the case of CST Vs. Master Kleen 2011 (9) TMI 788 - KARNATAKA HIGH COURT and in the case of CST Vs. Prasad Bidappa 2012 (8) TMI 749 - KARNATAKA HIGH COURT , I hold that the penalty imposed under Section 76 is liable to be set aside. - Decided in favour of appellant

Summary

Issues:
Penalty imposed for delay in payment of service tax under Section 76 challenged.

Analysis:
1. The appellant, engaged in providing manpower recruitment services, was found to have collected service tax but failed to remit it to the government. The appellant paid a portion of the tax and interest but was still penalized under Sections 76, 77, and 78. The penalty under Section 76 was contested in the appeal.

2. The appellant argued that there was no intention to evade tax, citing personal reasons for the delay in payment. The appellant contended that no suppression was involved as the tax was paid promptly after being pointed out. Documents were presented to support the claim of financial hardship due to a sick family member. The appellant referred to relevant legal judgments to support their case.

3. The authorized representative for the respondent contended that there was suppression on the part of the appellant, emphasizing that the tax was paid only after the authorities intervened and checked the records. The representative argued in favor of the legality of the imposed penalty.

4. The tribunal considered the submissions and found that while there was a default in tax payment, there was no evidence of suppression or misstatement in accounts. The appellant's circumstances, including a family member's serious illness and financial crisis, were taken into account. Relying on precedent judgments, the tribunal concluded that when service tax along with interest was paid promptly after being pointed out, the penalty under Section 76 should be set aside. No other arguments were entertained.

5. Consequently, the tribunal set aside the penalty imposed under Section 76 of the Finance Act, 1994, and allowed the appeal on those grounds. The operative part of the order was pronounced at the conclusion of the hearing.