2017 (12) TMI 25 - AT - Service Tax

Non-payment of service tax - Site Formation and Clearance, Excavation and Earth Moving and Demolition service - appellant pleaded that they could not present their case before the original authority, as by the time they have got Central Excise Registration and did not get the due intimation of the proceedings before the lower authorities, they also claim that they have paid service tax - Held that - Considering that the liability is not contested on merit, we direct the original authority to verify the payment details alongwith liability as raised in the demand proceedings to confirm the full discharge of liability alongwith interest, if any, applicable to the present case. Penalty - Held that - When the dispute regarding the Service Tax liability was raised, it would appear that they had consulted their clients for reimbursement to pay the tax, which was remitted to the Government on receipt from the client. In such situation, we are of the opinion that there is a reasonable cause for non-payment of tax, in time - penalty set aside. Appeal allowed in part and part matter on remand.

Issues:
1. Service Tax liability under various categories
2. Imposition of penalties under Sections 77 and 78 of the Finance Act, 1994
3. Verification of tax payment details and liability discharge
4. Consideration for waiver of penalty under Section 78

Analysis:

1. Service Tax liability under various categories:
The appeal was made against an order by the Commissioner of Central Excise regarding Service Tax liability of the appellants under the categories of Site Formation and Clearance, Excavation and Earth Moving, and Demolition service. The appellants were engaged in activities at a mine expansion project and were found liable for non-payment of Service Tax. The original authority confirmed the Service Tax liability and imposed penalties under Sections 77 and 78 of the Finance Act, 1994.

2. Imposition of penalties under Sections 77 and 78 of the Finance Act, 1994:
The appellants did not contest the tax liability but sought waiver of penalty under Section 78, citing reasonable cause for the non-payment of Service Tax. They had contacted the client to ascertain tax liability, followed the necessary procedures, and ultimately discharged the Service Tax amount to the Government. The Tribunal considered the circumstances and agreed that there was a reasonable cause for the delay in payment, leading to the decision to waive the penalty under Section 78 while upholding the tax liability on merit.

3. Verification of tax payment details and liability discharge:
The Tribunal directed the original authority to verify the payment details and confirm the full discharge of the tax liability along with any applicable interest. The appellants claimed to have discharged the Service Tax and requested verification of the same. They also mentioned difficulties in presenting their case before the original authority due to registration issues, which the Tribunal took into consideration while ordering the verification process.

4. Consideration for waiver of penalty under Section 78:
Considering that the appellants had consulted their clients for reimbursement to pay the tax, which was then remitted to the Government upon receipt from the client, the Tribunal found a reasonable cause for the delay in tax payment. As a result, the Tribunal decided to waive the penalty under Section 78, emphasizing the importance of verifying the full discharge of tax liability with applicable interest for the relevant period.

In conclusion, the Tribunal allowed the appeal in favor of the appellants, directing the original authority to verify the payment details, confirm the tax liability discharge, and waive the penalty under Section 78 while upholding the tax liability on merit.

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