2019 (11) TMI 563 - AT - Service Tax

Waiver of penalty - short paid service tax paid later - intent to evade or not - HELD THAT - Nowhere the appellant has made any defence regard the short fall of service tax paid by them. If the same is not detected by the Revenue, the said short fall remains a short fall of service tax which the appellant would have enjoyed - As the short fall has come during the investigation itself and the appellant did not explain the reasons and kept lingering on the matter for two years, in that circumstance, melafides of the appellant have been established by the Revenue. The appellant is not entitled for any relief from this Tribunal - Appeal dismissed.

Summary

Issues: Appeal against penalty imposition for short payment of service tax.

Analysis:
1. Facts of the Case: The appellant, a service provider registered with the Service Tax department, was found to have shown less receipt of services in their ST-3 returns compared to their income tax returns. Despite being called to explain the discrepancy, the appellant delayed providing the necessary data for correlation, eventually admitting to the short payment of service tax after a period of two years. Subsequently, a show cause notice was issued to impose penalties under Sections 77 and 78 of the Finance Act, 1994.

2. Appellant's Argument: The appellant's consultant argued that the appellant believed the responsibility of paying service tax lay with the person paying them commission, leading to the non-payment. They requested a waiver of the penalty on the grounds of bonafide belief.

3. Revenue's Argument: The authorized representative for the respondent contended that the appellant's delay in explaining the shortfall for two years indicated malafide intentions, justifying the imposition of penalties.

4. Judgment: After hearing both parties and examining the records, the Tribunal noted that the appellant failed to provide any defense regarding the short payment of service tax. The Tribunal found that the appellant's failure to detect the shortfall themselves, coupled with the delay in explanation and admission of guilt after investigation, established malafides. Consequently, the Tribunal upheld the imposition of penalties under Sections 77 and 78 of the Finance Act, 1994, denying relief to the appellant and dismissing the appeal.

5. Conclusion: The Tribunal's decision to dismiss the appeal signifies the affirmation of the penalty imposition due to the established malafides on the part of the appellant, emphasizing the importance of timely compliance and transparency in tax matters to avoid penalties and legal consequences.