2017 (8) TMI 703 - AT - Service Tax

Levy of penalty - Tax collected but not paid - entire tax with interest not paid before issuance of SCN - financial difficulty - Held that - once appellant have collected the service tax, then there was no justification for not paying the same to the Government - The appellants were aware of their service tax liability but they have taken the excuse of financial difficulty which is not a reasonable ground for not paying the service tax - impugned order upheld - appeal dismissed - decided against appellant.

Summary

Issues:
- Appeal against order rejecting appellant's appeal on service tax liability, interest, and penalty under Section 76 of the Finance Act, 1994.

Analysis:
1. Service Tax Liability: The appellant, a proprietorship concern, provided "Management Maintenance or Repair Service" and "Manpower Supply and Recruitment Agency Service." The Department found discrepancies in the ST-3 Returns, leading to a demand of unpaid service tax totaling ?2,34,079 and ?1,24,001 for the respective services. The Asst. Commissioner confirmed the demand along with interest and imposed a penalty under Section 76 of the Finance Act, 1994.

2. Grounds of Appeal: The appellant contended ignorance of the Service Tax law and financial difficulties as reasons for non-payment. The Commissioner (Appeals) rejected the appeal, prompting the appellant to appeal further.

3. Appellant's Argument: The appellant's counsel argued that the penalty under Section 76 was unjust as it failed to consider the circumstances leading to the delayed tax payment. Financial constraints were cited as the reason for the delay, despite the appellant being a regular service tax assessee since 2005.

4. Respondent's Defense: The Department argued that the appellant collected but did not remit the service tax to the Government, despite being aware of the tax liability since 2005. The respondent asserted that the appellant's financial difficulties did not justify the non-payment, citing precedents to support their stance.

5. Precedents: Both parties referenced various case laws to support their arguments. The appellant relied on a specific case, while the respondent cited multiple decisions to strengthen their position.

6. Judgment: After considering the submissions and evidence, the Tribunal upheld the impugned order. The Tribunal found the appellant's reasons for non-payment insufficient, emphasizing that financial difficulties did not absolve the appellant of their tax obligations. The Tribunal dismissed the appeal, affirming the penalty and interest imposed by the lower authorities.

This detailed analysis covers the issues raised in the appeal regarding service tax liability, interest, and penalty under Section 76 of the Finance Act, 1994, providing a comprehensive overview of the arguments presented and the Tribunal's decision.