2018 (6) TMI 1015 - HC - Service Tax

Maintainability of appeal - Question of fact involved - Penalty u/s 78 of FA, 1994 - service tax paid by service tax recipient belatedly - Held that - No question of law arises in the present appeal filed by the Appellant as both the Appellate Authorities below have concurrently found as fact, against the Assessee that the Appellant did not pay the service tax in time even though such service tax was collected from the service recipient. Appeal dismissed as without merit - If the Appellant-Assessee feels that any mistake apparent has occurred at the hands of the learned Tribunal by not considering the documents produced by it, it is open to the Appellant-Assessee to take recourse to appropriate legal measures as provided under Section 35C of the Act.

Summary

Issues:
Appeal under Section 35G of the Central Excise Act, 1944 against the Order passed by the Customs, Excise & Service Tax Appellate Tribunal upholding a penalty imposed under Section 78 of the Finance Act, 1994 for non-payment of service tax collected from the service recipient.

Analysis:
The Appellant filed an appeal against the Order passed by the Customs, Excise & Service Tax Appellate Tribunal upholding a penalty imposed under Section 78 of the Finance Act, 1994. The Tribunal upheld the penalty of ?8,04,615/- as against the original penalty of ?18,57,069/- imposed by the Assessing Authority. The Tribunal found that the Appellant did not pay the service tax despite collecting it from the service recipient. The Tribunal referenced previous cases to support its decision, emphasizing that financial crisis is not a valid reason for non-payment of service tax when it has been collected. The Tribunal concluded that the decisions cited by the Appellant's counsel were not applicable to the current case. The Appellant argued that they had paid the due service tax for one service recipient belatedly, attributing the delay to financial difficulties caused by another service recipient's non-payment.

The High Court considered the arguments presented by the Appellant and found that no question of law arose in the appeal. Both lower authorities had determined that the Appellant failed to pay the service tax collected from the service recipient in time. The Appellant's submission regarding financial constraints due to non-payment by another service recipient was noted but not considered a valid reason for non-payment. The Court agreed with the Tribunal that financial constraints do not justify withholding service tax collected from customers. Section 78 of the Finance Act, 1994 was deemed applicable, and the reduced penalty amount was upheld by the Tribunal. The Court concluded that the appeal lacked merit and dismissed it. The Appellant was advised to pursue legal measures under Section 35C of the Act if they believed any errors had occurred in the Tribunal's consideration of the documents.

In summary, the High Court upheld the Tribunal's decision to impose a penalty under Section 78 of the Finance Act, 1994 for the Appellant's failure to pay service tax collected from the service recipient. Financial difficulties were not accepted as a valid reason for non-payment, and the appeal was dismissed for lacking merit. The Appellant was advised on further legal recourse if they believed any errors had occurred during the proceedings.