2017 (5) TMI 239 - AT - Service Tax

Imposition of penalty u/s 76, 77 and 78 of the FA, 1994 - appellant claim that there was no mala fide intention to evade service tax in the present case, hence the penalties imposed upon them may be waived in terms of Section 80 of the FA, 1994 - Held that - The intention of appellant is evident from the fact that the appellant has not recovered the service tax from the service receivers. In spite of that, they have come forward to pay the full service tax dues along with applicable interest thereon - due to misunderstanding and ignorance of law, appellant have neither collected any service tax on the various service tax income nor paid the service tax to the Government. This fact clearly establishes the fact that the appellants had no mala fide intention to evade payment of service tax - this is a fit case to invoke the provisions of Section 80 and waive the penalties imposed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge against imposition of penalty under Section 76, 77, and 78 of the Finance Act, 1994.

Analysis:
The appellant, a service provider in various categories, appealed against an Order-in-Original passed by the Commissioner of Service Tax, demanding service tax along with penalties. The appellant contended that they had already paid the service tax and interest, denying any mala fide intention to evade tax. The appellant relied on case laws to support their argument for waiving penalties. The respondent, represented by the AR, supported the impugned order. The appellant did not dispute the liability to pay service tax and provided evidence of payment. The appellant's intention to comply was evident as they did not recover the service tax from their clients. The appellant cited case laws where penalties were waived under Section 80 of the Finance Act, 1994, due to reasonable cause. The Hon'ble Karnataka High Court decisions supported the appellant's position, emphasizing the discretion in imposing penalties under Sections 76, 77, and 78. The court noted that the appellant's ignorance of service tax liability and misunderstanding led to non-payment, indicating no mala fide intent. Considering the circumstances, the Tribunal invoked Section 80 and waived the penalties while upholding the payment of service tax with interest. The appeal was disposed of accordingly.