2016 (10) TMI 912 - AT - Service Tax

Imposition of penalties u/s 76 - revised return filed - payment of duty and interest voluntarily - invocation of section 80 - service tax on Clearing and Forwarding Services - Held that - It is not disputed that appellant has paid up their duty liability voluntarily, albeit beyond the due date. They have also subsequently discharged that interest liability thereon. Keeping in mind these facts, I am of the considered opinion that imposition of penalty under Section 76 in this case is unjust and unfair. In view of the extenciating circumstances, the original or lower appellate authority should have permitted waiver of penalties by invokation of Section 80 of the Finance Act, 1994. Reliance placed on the decision of M/s Bas Engineering Pvt. Ltd. Versus CST, Delhi 2013 (12) TMI 918 - CESTAT NEW DELHI where it was held that appellants paid the entire amount before issue of Show Cause Notice - provision of section 80 are invokable. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Appellant's payment of service tax based on actual amounts realized.
2. Demand for interest on delayed payment and proposed penalty.
3. Imposition of penalty under Section 76 of the Finance Act, 1994.

Analysis:

1. The appellant, a provider of Clearing and Forwarding Services, filed revised ST3 returns for various periods, stating that they paid service tax on the full amounts realized, not just on margin amounts. The Department issued a notice demanding interest on delayed payments and proposed penalties. The issue revolved around the differential amount paid compared to the assessed tax liability for the relevant periods.

2. The Original Authority confirmed the tax liability, interest, and imposed a penalty under Section 76. In appeal, the Commissioner (Appeals) upheld the decision, leading to the current appeal. The appellant argued that the penalty was unjust as they voluntarily paid the tax and later settled the interest liability. They cited relevant case laws to support their stance.

3. After hearing both sides, the tribunal acknowledged that the appellant paid the duty liability voluntarily, albeit after the due date, and subsequently cleared the interest liability. Considering these circumstances and the case laws cited, the tribunal deemed the penalty under Section 76 unjust and unfair. The tribunal held that the lower authorities should have considered waiving the penalty under Section 80 of the Finance Act, 1994. Consequently, the tribunal set aside the penalty imposed under Section 76, allowing the appeal on these grounds.