2008 (7) TMI 297 - AT - Service Tax

Delay in payment of tax - no mala fide and no intention to evade payment of duty - their Head Office was in Delhi and the appellants were under the impression that the service tax liability would be discharged at the Head Office - When lapse was pointed out, service tax liability discharged along with interest even before issue SCN - original authority correctly exercised his powers u/s 80 - case cannot be reopened to enhance the penalty by the Commissioner in the Order-in- Revision

Summary

Issues:
- Appeal against Review Adjudication Order imposing penalties under various sections of the Finance Act, 1994.
- Interpretation of provisions related to waiver of penalties under Section 80 of the Finance Act, 1994.
- Comparison of decisions by the Karnataka High Court in similar cases.
- Review of the Commissioner's Order-in-Revision regarding the imposition of penalties.

Analysis:
1. The appeal was filed against the Review Adjudication Order imposing penalties for non-payment of service tax by the appellants. The Commissioner of Service Tax, Bangalore, passed the impugned Order-in-Review under Section 84 of the Finance Act, 1994, imposing penalties amounting to Rs. 1000, Rs. 100 per day, Rs. 1000, and Rs. 5,00,000 under different sections of the Act.

2. The appellants, represented by Shri M.S. Nagaraj, contended that there was no intention to evade payment of service tax. They promptly paid the outstanding amount along with interest upon realizing the lapse, even before the show cause notice was issued. The Original Authority acknowledged the inadvertent non-payment and waived the penal proceedings. The advocate referred to Section 73(3) of the Finance Act, 1994, which allows for the waiver of show cause notice upon immediate payment by the assessee.

3. The Departmental Representative argued that the Tribunal should uphold the Commissioner's Order-in-Revision based on the decision of the Karnataka High Court in a similar case. However, the Tribunal found that the case law cited by the Department did not support the Revenue's position. The Tribunal emphasized that the Original Authority had valid reasons for waiving the penalty under Section 80 of the Finance Act, 1994, as there was no deliberate evasion of service tax.

4. After careful consideration, the Tribunal concluded that the Original Authority's decision to waive penalties was justified. The Tribunal referenced a previous case where it was established that once the Original Authority exercises discretion under Section 80 of the Finance Act and records proper reasons, the Commissioner cannot enhance the penalty through an Order-in-Revision. Therefore, the Tribunal set aside the impugned Order-in-Revision and restored the decision of the Original Authority.

5. The Tribunal's decision was pronounced on 25-7-2008, emphasizing the importance of proper reasoning and adherence to statutory provisions when imposing penalties for non-compliance with service tax obligations. The case highlighted the significance of timely payment upon detection of lapses and the limitations on revising penalty decisions made by the Original Authority.