2017 (12) TMI 1438 - AT - Service Tax

Penalties u/s 76 and 77 - delayed payment of tax with interest - Held that - since there was not intent to evade duty involved, tax with interest was paid although after delay - penalty u/s 77 dropped by invoking section 80. Penalty u/s 76 - Held that - since the appellant has paid the dues after a lapse of longer period, therefore he is liable to pay the penalty under Section 76 as held by the original authority - penalty u/s 76 upheld. Appeal allowed in part.

Summary

Issues:
1. Appellant not paying service tax on certain charges.
2. Penalties imposed on the appellant.
3. Appeal against the penalties upheld by the Commissioner (Appeals).

Analysis:
The judgment deals with an appeal against penalties imposed on an appellant engaged in manufacturing Rubber Products and providing job work services. The appellant failed to pay service tax on loading and unloading charges, weighing charges, and legal charges during the period 2009-2013. A show-cause notice was issued, and the original authority confirmed the demand and penalties under various sections of the Finance Act, 1994. The appellant continued non-payment for the period 2013-14, leading to another show-cause notice. The Commissioner (Appeals) upheld the penalties, prompting the appellant to file an appeal.

Upon hearing both parties, the appellant's counsel argued that the impugned order did not consider the facts and evidence, citing a previous Tribunal decision that benefited the appellant. The appellant sought the dropping of penalties under Sections 76 and 77 of the Finance Act, 1994. The respondent's representative contended that the penalties were justified due to delayed payment by the appellant.

The Tribunal found that in a similar case involving the appellant, penalties under Section 77 were dropped, following the benefit under Section 80 of the Finance Act. Consequently, the Tribunal also dropped the penalty under Section 77 in the present case. However, regarding the penalty under Section 76, the Tribunal upheld it since the appellant paid the dues after a significant delay, as determined by the original authority. Therefore, the impugned order was partly upheld, imposing the penalty under Section 76 but dropping the penalty under Section 77. The appeal was partly allowed, with the operative portion of the order pronounced in open court on 22/11/2017.