2023 (9) TMI 1091 - AT - Service Tax

Waiver of penalty imposed u/s 77 and 78 of FA - entire service tax along with interest was paid before adjudication of the case - Business Auxiliary Service (BAS) - adjustment of excess payment against the interest liability payable by the appellant - HELD THAT - It is a fact on record that the Appellant has obtained service tax registration but did not file ST-3 returns in time. Later, after intervention of the officers of SIV unit and verification of their records on 23.02.2006, the Appellant has paid the Service Tax and Education Cess amounting to Rs.15,07,204/- on various date in 2007 and 2009. The available records also indicate that the Appellant have received commission amounting to Rs.9,69,558/- on 22.05.2003, which was not liable to Service Tax in as Business Auxiliary Service was introduced only w.e.f 01.07.2003 - Even though they paid service tax later, there was a delay in payment of service tax. Interest is liable to be paid for the delayed payment of service tax. Accordingly, the adjudicating authority has appropriated the excess paid amount against the interest liability. Thus, there is no infirmity in the impugned order adjusting the excess payment against the interest liability payable by the appellant. Imposition of penalties under Sections 77 and 78 of the Finance Act, 1994 - HELD THAT - Regarding penalty imposed under Section 78 of the Finance Act, 1994, there were some confusion prevailed during the relevant period on the liability of payment of service tax as a Commission Agent . However, the Appellant agreed their liability and paid most of the service tax before issue of the Notice. In fact, they have paid excess service tax than the actual liability confirmed in the impugned order. This has been recorded in the order-in-original by the adjudicating authority - There is no other evidence brought on record to establish that the Appellant has intentionally evaded payment of service tax. Thus, there was no suppression of fact with an intention to evade payment of tax, established in this case. Since the Appellant has already paid the entire service tax payable and the interest liability has also been adjusted from the excess service tax paid, it is a fit case for invoking section 80 of the Finance Act, 1994, to waive the penalties imposed under section 77 and 78 of the Finance Act, 1994. Accordingly, the penalties imposed under section 77 and 78 of the Finance Act, 1994 set aside. The penalties imposed in the impugned order is set aside and the confirmation of service tax and adjustment of interest payable from the excess service tax paid upheld. The Appeal filed by the Appellant is disposed.

Summary

Issues:
The issues involved in the judgment are the demand of Service Tax and Education Cess, filing of ST-3 returns, liability of service tax as a 'Commission Agent', delay in payment of service tax, penalties imposed under Sections 77 and 78 of the Finance Act, 1994.

Details of Judgment:

Demand of Service Tax and Education Cess:
The Appellant, engaged in Business Auxiliary Service, received commission but did not pay service tax. A show cause notice was issued demanding Rs.13,84,363. The Appellant paid Rs.15,07,204 before adjudication, exceeding the demand. The adjudicating authority confirmed the demand and adjusted excess payment towards interest. The appeal against this was upheld by the Ld. Commissioner (Appeals).

Filing of ST-3 Returns and Delay in Payment:
The Appellant obtained service tax registration but did not file ST-3 returns in time. They paid the service tax later, with a delay in payment. The excess payment was adjusted against interest liability. The impugned order adjusting the excess payment against interest liability was found valid.

Liability of Service Tax as a 'Commission Agent':
Confusion existed regarding the liability of service tax as a 'Commission Agent'. Most of the service tax was paid before the show cause notice. The adjudicating authority acknowledged the excess payment. Penalties under Sections 77 and 78 were contested by the Appellant.

Penalties Imposed under Sections 77 and 78:
The Appellant paid the entire service tax and had no intention to evade payment. The excess service tax paid covered the interest liability. Section 80 of the Finance Act, 1994 was invoked to waive the penalties imposed under Sections 77 and 78. The penalties were set aside.

Conclusion:
The penalties imposed were set aside, confirming the service tax demand and adjustment of interest from the excess payment. The appeal was disposed of accordingly.