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TMI Blog2010 (10) TMI 281X X X X Extracts X X X X X X X X Extracts X X X X ..... epartment came to know about the appellant’s activity, he had not obtained service tax registration - Therefore, in view of the circumstances of the case, it cannot be said that the appellant was prevented from obtaining service tax registration and discharging the service tax liability due to any reasonable cause and hence, the Commissioner (Appeals)’s order denying the benefit of Section 80 of the Finance Act is correct - plea that simultaneous penalty under Section 76 and 78 cannot be imposed is not accepted the impugned order on these points is upheld, the matter is remanded to the Commissioner (Appeals) for deciding the question of reduced penalty under first proviso to Section 78 of the Finance Act, in accordance with the ratio of Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecovery of the allegedly non-paid service tax amounting to Rs. 5,90,015/- alongwith interest and also for imposition of penalty on him under Section 75A, 76, 77 and 78 of the Finance Act, 1994. However, prior to the issue of show cause notice, the appellant in March 2008 itself had paid an amount of Rs. 3,98,336/-. 1.2 The show cause notice was adjudicated by the Joint Commissioner vide order-in-original No. 65/ST/JC/2008 dated 23rd December 2008 by which the service tax demand of Rs. 5,90,015/- was confirmed against the appellant alongwith interest under proviso to sub-Section (1) of Section 73 of the Finance Act, 1994 and the amount of Rs. 3,98,336/- deposited by the appellant was appropriated towards this demand. Beside this, penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of repair activity became taxable but still the Department initially demanded the duty for the entire period and only at the Commissioner (Appeals) level the duty demand for the period prior to 16-6-05 was set aside, which shows that during initial period, the Department itself was not clear about the scope of this service, that the appellant was neither informed by his client about the service tax liability nor any amount towards service tax was paid to him by his client, that non-payment of service tax by the appellant was due to genuine reasons and, therefore, the provisions of Section 80 of the Finance Act are applicable to the case of the appellant. He also pleaded that though the appellant is not contesting the service tax liability, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his activity, that the department came to know about the taxable service being provided by the appellant only in the course of audit of the records of his client M/s. Nawanshahr Coop Sugar Mills Colony, that for invoking the provision of Section 80, the assessee has to prove that there was reasonable cause for failure to discharge the service tax liability that the burden of proving the existence of reasonable cause for failure to discharge of liability is on the assessee which has not been discharged, and that ignorance of the law is not an excuse for non-compliance. On the question as to whether penalty under Section 76 and 78 can be imposed at the same he cited the judgment of Hon'ble Kerala High Court in the case of Assistant Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tanding anything contained in 76, 77 and 78, no penalty shall be imposable on the assessee for any failure referred to in the said provisions, if the assessee proves that there was reasonable cause for the said failure. From the language of this Section, it is clear that it is the assessee who has to prove the existence of reasonable cause for failure to obtained the service tax registration, file the return and discharge the service tax liability. In this case other than the ignorance of the law no other reason for failure to obtain service tax registration and discharge the service tax liability has been given. I also find that while the appellant's activity had come within service tax net w.e.f 16-6-05 even till March 2008, when the Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court in the case of K.P. Pouches (P) Ltd. v. Union of India (supra), penalty of only 25% of the service tax demand can be imposed. However, I find that for giving the benefit of reduced penalty under proviso to Section 78 of the Finance Act, it is necessary that in addition to service tax, the interest on service tax should also have been paid prior to the issue of show cause notice and only in that situation in accordance with Hon'ble Delhi High Court's judgment in the case of K.P. Pouches (P) Ltd., the benefit of reduced penalty can be extended. But in this case while the duty liability of the appellant, as upheld by the Commissioner (Appeals) is Rs. 3,20,467/- the amount deposited in March 2008 was Rs. 3,98,336/- and there is no fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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