2018 (9) TMI 257 - AT - Service Tax

Penalty under Section 76 of the Finance Act 1994 - the appellant did not discharge its tax liability within stipulated time frame and the same was deposited into the Government exchequer subsequently but before the issuance of SCN - Held that - The issue arising out of the present dispute regarding the imposition of penalty under Section 76 of the Act under similar set of facts is no more res integra in view of the decision of this Tribunal in the case of Virtual Marketing (India) Pvt Ltd. 2016 (11) TMI 18 - CESTAT MUMBAI where under similar set of facts and circumstances by invoking the provisions of Section 80 of the Act the Tribunal has set aside the penalties imposed on the appellant therein - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues: Imposition of penalty under Section 76 of the Finance Act, 1994.

The judgment revolves around the imposition of penalty under Section 76 of the Finance Act, 1994. The appellant failed to discharge its tax liability within the stipulated time frame but paid it before the issuance of a show-cause notice. The appellant sought waiver of penalty under Section 80 of the Act due to financial constraints, citing a previous Tribunal decision. The Revenue, however, supported the penalty imposed in the impugned order. The Tribunal considered the facts, including timely payment before the notice, and referred to a previous case where penalties were waived under Section 80 due to financial difficulties. The Tribunal concluded that the benefit of Section 80 should be extended to the appellant, setting aside the penalty under Section 76 in favor of the appellant.

The key issue in this judgment was whether the appellant should be penalized under Section 76 of the Finance Act, 1994, for not discharging its tax liability within the stipulated time frame. The appellant argued for a waiver of penalty under Section 80 due to financial constraints, supported by a previous Tribunal decision. The Tribunal analyzed the facts, noting the timely payment before the show-cause notice and the appellant's financial crisis. Referring to the previous case, the Tribunal decided to extend the benefit of Section 80 to the appellant, thereby setting aside the penalty under Section 76.

The judgment highlights the application of Section 80 of the Finance Act, 1994, in cases of delayed tax payments due to financial difficulties. The Tribunal considered the appellant's timely payment before the show-cause notice, the financial crisis faced by the appellant, and a previous decision where penalties were waived under Section 80 in similar circumstances. By extending the benefit of Section 80 to the appellant, the Tribunal set aside the penalty under Section 76, emphasizing the appellant's bonafide intention to discharge the tax liability despite financial constraints.

The Tribunal's decision in this case focused on the interpretation and application of Section 80 of the Finance Act, 1994, in relation to the imposition of penalties under Section 76. The Tribunal considered the appellant's payment of tax before the show-cause notice, the financial difficulties faced by the appellant, and a previous case where penalties were waived under Section 80. By applying the principles established in the previous case, the Tribunal extended the benefit of Section 80 to the appellant, leading to the setting aside of the penalty under Section 76.