2018 (9) TMI 1384 - AT - Service Tax

Penalty u/s 76 of FA - 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 show-cause notice - invocation of section 80 - Held that - The service tax for the disputed period was paid by the appellant before issue of show-cause notice and the interest amount was paid subsequently, before the adjudication of the matter. The issue arising out of the present dispute regarding 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 it was held that appellant showed the reasonable cause for non payment of service tax on due time. Interest on the said service tax also paid by the appellant separately as per the direction of this Tribunal, appellant is entitled for waiver of penalty under Section 76,77 and 78 in terms of Section 80 of the Finance Act, 1994. The benefit of Section 80 of the Act should be extended to the appellant for non imposition of penalty under Section 76 of the Act - appeal allowed - decided in favor of appellant.

Summary

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

Analysis:
The appellant failed to discharge its tax liability within the stipulated time frame, leading to the imposition of a penalty under Section 76 of the Finance Act, 1994. The appellant argued for the waiver of penalty under Section 80 of the Act, citing financial constraints as the reason for the delay in tax payment. The appellant relied on a previous Tribunal decision in a similar case to support their argument for penalty waiver. The Revenue, represented by the D.R., reiterated the findings of the impugned order upholding the penalty. The Tribunal considered the facts, including the timely payment of tax before the show-cause notice and the subsequent payment of interest. The Tribunal referred to a previous decision where penalties were waived under Section 80 due to financial difficulties and bonafide intention to pay the tax. Based on the precedent set by the previous decision, the Tribunal extended the benefit of Section 80 to the appellant, setting aside the penalty imposed under Section 76 of the Act. The impugned order confirming the penalty was overturned, and the appeal was allowed in favor of the appellant.