2019 (10) TMI 583 - AT - Service Tax

Imposition of penalties u/s 77 and 78 of FA - Renting of immovable Property Service - appellant had collected rents and advances but had not discharged service tax except in respect of one shopping complex - extended period of limitation - HELD THAT - In view of the fact that the penalties were imposed under mandatory provision by the lower authorities and they had no choice but to impose the same, there are no infirmity in the order. Further, during the relevant period, Section 80 of the Finance Act, 1994 which provided for waiver of penalties in case of reasonable cause for failure to comply with the provisions, does not apply. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Non-appearance of the appellant during the proceedings.
2. Imposition of penalties under sections 77 & 78 of the Finance Act, 1994.

Issue 1: Non-appearance of the appellant during the proceedings:
The appellant failed to appear during multiple scheduled hearings despite opportunities given. The matter was adjourned several times due to the absence of the appellant. The appellant had filed a Miscellaneous application seeking condonation of delay, which was granted, but still, no representation was made on behalf of the appellant during the subsequent hearings. The Tribunal proceeded to decide the matter on merits based on the records and submissions made in the appeal memorandum.

Issue 2: Imposition of penalties under sections 77 & 78 of the Finance Act, 1994:
The case involved the appellant providing the service of "Renting of immovable Property" to various clients but not discharging service tax except in one instance. A show cause notice was issued proposing recovery of service tax, interest, and penalties under sections 76, 77 & 78 of the Finance Act, 1994. The appellant paid the service tax and interest before the notice was issued. The original authority confirmed the demand, interest, and imposed penalties under sections 77 & 78 but refrained from imposing a penalty under section 76. On appeal, the first appellate authority upheld the decision but reduced the late fee. The appellant contested the penalties under sections 77 & 78, arguing that they had already paid the service tax and interest before the notice. The Department argued that mandatory penalties cannot be reduced or waived, citing relevant case law. The Tribunal upheld the penalties imposed by the lower authorities, stating that during the relevant period, the provision for waiver of penalties did not apply.

In conclusion, the Tribunal rejected the appeal, upholding the penalties imposed under sections 77 & 78 of the Finance Act, 1994, due to the mandatory nature of the penalties and the absence of a provision for waiver during the relevant period. The decision was based on the records and submissions made in the appeal memorandum, as the appellant did not appear during the proceedings.