2018 (7) TMI 1790 - AT - Service Tax

Imposition of penalty - the assessee had paid the Service Tax on Renting of Immovable Property within a period of six months from receiving the President assent to the Finance Bill 2012 - Revenue s only grievance is that the entire tax was not paid within a period of six months and small amount of 18, 000/- approx was deposited subsequently - Held that - Admittedly the matter was under litigation before various courts and as such not free from doubt. In such a scenario the penalty imposition in any case was not justified and has been rightly set aside by Commissioner (Appeals) - appeal dismissed - decided against Revenue.

Summary

Issues involved:
Challenge to setting aside penalty by Commissioner (Appeals) on grounds of timely payment of Service Tax on 'Renting of Immovable Property'.

Analysis:
The judgment pertains to an appeal filed by the Revenue against the decision of the Commissioner (Appeals) regarding the imposition of a penalty for non-payment of Service Tax on 'Renting of Immovable Property' within the specified time frame. The appellant had paid the impugned service tax, along with interest, for the period Jan. 2008 to June 2011. A small amount of tax was found to be unpaid due to a calculation error, which was later paid by the appellant. The Commissioner (Appeals) set aside the penalty, citing various precedents that suggest penalty imposition is not justified when there is a bona fide doubt about liability or non-applicability to pay service tax. The Commissioner also referred to Section 80(2) of the Finance Act, 1994, which provides for penalty waiver if the entire service tax is paid within a specified time frame. The Revenue contended that since a small amount was paid after the deadline, the penalty should not have been set aside.

The Tribunal, after considering the arguments from both sides, found no merit in the Revenue's contention. It noted that the matter was under litigation in various courts, indicating a lack of clarity and doubt regarding the tax liability. In such circumstances, the imposition of a penalty was deemed unjustified. Therefore, the Tribunal rejected the Revenue's appeal and upheld the decision of the Commissioner (Appeals) to set aside the penalty. The cross objection, which was in the nature of written submission, was also disposed of accordingly.

In conclusion, the judgment emphasizes the importance of considering bona fide doubts and legal precedents when determining the imposition of penalties for non-payment of taxes. It highlights the need for clarity and certainty in tax liabilities to avoid unjust penalties, especially when there are genuine uncertainties or disputes regarding the tax obligations.