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TMI Blog2019 (12) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... 49,49,612/- (Rupees Forty Nine Lakhs Forty Nine Thousand Six Hundred and Twelve only) under Section 78 of the Act. Penalty under Section 76 was not imposed. 2. Briefly the facts of the present case are that the appellant is a proprietary concern engaged in Security Agency Service. During the audit of the accounts of the appellant, it was noticed that the appellant had shown the liabilities towards service tax in their Audited Financial Statement for the period 2006-07 to 2009-10. The amount of service tax collected was not paid to the Department amounting to Rs. 49,49,612/- (Rupees Forty Nine Lakhs Forty Nine Thousand Six Hundred and Twelve only). The appellant paid the tax as pointed out by the audit along with interest before the issue o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the conclusion that in the present case there was no intention to evade payment of service tax and the party has deposited the entire amount as soon as the Department appraised them. He further submitted that the original authority has also observed in para 16 that it will be harsh to impose penalty on the appellant who is tax compliant assessee and therefore by invoking the discretionary power under Section 80 of the Act, the original authority refrained from imposing the penalty under Section 76 and 78 of the Act by relying upon the ratio of the judgments in the case of K.S. Murali Mohan Vs. CST, Bangalore - 2011 (21) S.T.R. 512 (Tri.-Bang.) and P. Jani & Co. Vs. CST, Ahmedabad - 2010 (20) S.T.R. 701 (Tri.-Ahmd.). He further submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has held that penalty is not leviable for delay in payment of duty on account of financial constraints as it is not an act of fraud or willful evasion. The learned counsel also relied upon the decision of Commr. of Central Excise, Noida Vs. Delphi Automotive Systems Ltd. reported in [2013] 30 taxmann.com 639 wherein it has been held that for imposition of penalty under Section 11AC of the Central Excise Act, 1944 mens rea is an essential part for levy of penalty. He has also relied upon the decision of the Karnataka High Court in the case of Commr. of Service Tax Vs. Motor World [2012] 22 taxmann.com 35 wherein it has been held in the conclusion by the Hon'ble High Court in para 33 "even if the ingredients stipulated in Sections 76 and 78 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty of only Rs. 10,000/- (Rupees Ten Thousand only) under Section 77 for violation of various provisions of Finance Act and the Rules of 1994. Further we find that once the appellant has shown the duty liability in their Books of Accounts which clearly means that there was no suppression of material fact to evade the payment of tax and non-payment was on account of financial difficulties which has been proved by the assessee on record by producing sufficient documentary evidence. In view of our discussion above, we are of the view that the ratio of the judgment relied upon by the appellant clearly establishes that no penalty is imposable under Section 76 and 78 if there is a reasonable cause for not paying the service tax as held by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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