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2022 (9) TMI 900 - AT - Service TaxLevy of penalty of 75% - late payment of part penalty - demand under GTA Service in respect of freight amount exceeds to Rs. 750/- and Rs. 1500/- - appellant, complying with the option given by Adjudicating Authority, though paid 25% of penalty but after the stipulated time of one month - HELD THAT - Though the appellant have made ground against confirmation of demand also but learned Counsel Shri Paresh Sheth fairly concedes that the appellant is contesting only for 75% penalty imposed under Section 78 of Finance Act, 1994. Though the appellant have paid 25% penalty but the same was paid after the stipulated time period of 30 days. Since the said period is statutory, same cannot be relaxed. However, it is found that the appellant otherwise paying service tax as per the belief that service tax is payable only in cases where freight amount is exceeding Rs. 750/-. There is only a misunderstanding about the calculation of limit of Rs. 750/-. Moreover, the appellant have paid entire service tax, interest and 25% penalty. A lenient view can be taken particularly for waiver of penalty of 75% - penalty of 75% under Section 78 of Finance Act, 1994 invoking Section 80, is set aside - demand of service tax, interest (if any) and 25% penalty under Section 78 is upheld. Appeal allowed in part.
Issues:
Challenge to penalty of 75% under Section 78 of Finance Act, 1994 for delay in payment of 25% penalty within stipulated time period. Analysis: The appeal before the Appellate Tribunal CESTAT Ahmedabad was against the order of the Commissioner (Appeals) upholding the order-in-original and rejecting the appellant's appeal. The Adjudicating Authority confirmed the demand under the GTA Service for freight amounts exceeding Rs. 750 and Rs. 1500. The appellant contested the penalty of 75% imposed, acknowledging a delay in paying 25% of the penalty after the stipulated one-month period. The appellant's representative argued that the delay should not negate the option of 25% penalty, citing a misunderstanding regarding the interpretation of service tax provisions for freight amounts exceeding the specified limits. The appellant maintained regular payment of service tax in good faith, indicating no intention to evade payment. The Revenue's representative reiterated the findings of the impugned order. Upon review, the Tribunal noted the appellant's challenge against the demand confirmation but acknowledged the focus on contesting the 75% penalty under Section 78 of the Finance Act, 1994. The appellant had paid 25% of the penalty after the statutory 30-day period, which could not be relaxed. However, considering the appellant's consistent payment of service tax based on a genuine belief regarding the taxable limits, the Tribunal found a misunderstanding in calculating the Rs. 750 limit. Despite the payment of service tax, interest, and 25% penalty, the Tribunal decided to waive the 75% penalty invoking Section 80, upholding the demand for service tax, interest, and the 25% penalty under Section 78. The appeal was partly allowed with the penalty of 75% under Section 78 being set aside, while the demand for service tax, interest, and the 25% penalty was upheld. The judgment was pronounced in open court on 19.09.2022 by Mr. Ramesh Nair, Member (Judicial), and Mr. Raju, Member (Technical).
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