2017 (9) TMI 261 - AT - Service Tax

Penalty u/s 76 - Delayed payment of service tax - Held that - the appellant explained the delay in depositing the service tax on the ground of change of management. It is noticed that the appellant is a public limited company and therefore, was aware of the tax liabilities - There is no material available on record with regard to allegation of fraud, suppression of facts, etc. Taking into consideration the facts leading to delay in depositing tax, it is appropriate that the imposition of penalty u/s 76 should be waived - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Imposition of penalty under Section 76 of the Finance Act, 1994 for non-payment of Service Tax.
2. Delay in depositing service tax due to change of management.
3. Applicability of Board's Circular F. No.137/46/2015-S.T. dated 18-8-2015 on penalty waiver.

Analysis:
1. The appellant, a service provider under "Mining of Mineral, Oil or Gas" category, faced penalties under Section 76 of the Finance Act, 1994 for not discharging tax liabilities on time in two separate appeal cases. The appellant paid the entire service tax amount along with interest before filing ST-3 returns. The Commissioner imposed penalties of ?18,06,285 and ?38,40,661 in the respective cases.

2. The appellant attributed the delay in tax payment to a change in management, specifically due to merger/amalgamation/takeover, causing a delay in collecting financial data and facing severe financial constraints. The appellant, a public limited company, acknowledged the delay but highlighted the circumstances leading to it. The appellant paid the due tax, filed returns, and informed the department about the situation.

3. The appellant's counsel argued citing a CBEC clarificatory letter and a tribunal decision supporting the conclusion of proceedings proposed under Section 73 of the Act upon payment of tax and interest. The Board's Circular F. No.137/46/2015-S.T. dated 18-8-2015 was referenced, emphasizing that in cases without fraud or suppression of facts, paying tax and interest either before or within 30 days of the show cause notice issuance concludes the proceedings without penalty imposition.

4. After reviewing the arguments and the appeal records, the tribunal found that the appellant did not contest the service tax amount and admitted the delay in payment due to management changes. Considering the circumstances, the tribunal waived the penalties under Section 76 based on the Board's Circular and the absence of fraud or suppression of facts, concluding that the proceedings should be deemed concluded upon payment of tax and interest.

In conclusion, the tribunal allowed the appeals, pronouncing the penalty waiver on 12-1-2017.