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2023 (3) TMI 889 - AT - Service TaxLevy of penalty under Section 77 and 78 of the Act - audit has found that the service tax with respect to the six months period from April 2013 to October 2013, which was not paid on accrual basis - suppression of facts or not - HELD THAT - There is no deliberate default in payment of tax liability by the appellant. The issue is wholly interpretational in nature. Admittedly, the appellant was paying taxes regularly but there is only technical or venial breach of law, as they should have paid the tax on monthly basis. It appears the appellant was not properly advised by their consultant in the matter. Accordingly, it is found that there is reasonable cause for not depositing the tax on month to month basis. The penalties under Section 77 and Section 78 of the Act are set aside - appeal allowed.
Issues involved: Whether penalties u/s 78 and u/s 77 of the Act have been rightly imposed.
Summary: The appellant, engaged in renting immovable property services, faced penalties for alleged non-payment of service tax on time. The appellant paid the tax annually for some tenants and monthly for others. An audit revealed discrepancies, leading to a demand for unpaid taxes. The appellant accepted the audit findings and paid the outstanding amounts. Despite reminders, the appellant did not pay the prescribed penalties, resulting in a show cause notice. The penalties under Section 78 and Section 77 were imposed after adjudication. The Commissioner (Appeals) upheld the penalties citing suppression of facts. The appellant contended that they maintained proper records and had paid taxes regularly. They argued that the discrepancies were due to interpretation differences and a genuine belief in compliance. The appellant sought to set aside the penalties imposed. Upon review, it was found that the appellant did not willfully default in tax payment and the issue was interpretational. The appellant's regular tax payments indicated no fraudulent intent, with the non-compliance being a technical error. It was noted that the appellant may not have received proper advice on tax payment frequency. Considering these factors, the penalties under Section 77 and Section 78 of the Act were set aside, and the appeal was allowed.
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