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2017 (10) TMI 706 - AT - Service TaxPenalty u/s 77 and 78 - It was alleged that neither any return was filed during the period in question nor any service tax was deposited, no intimation was given to the Revenue as regards the assessee's liability and obligation to pay the said amount to service tax - Held that: - there is no dispute on the facts that the assessee is under a legal obligation to file the requisite returns provided under the statute and to discharge its service tax liability accordingly. The appellant in the present case was duly aware of its legal obligations as they were registered with the serviced tax department and were following due procedure prior to the period in question. The appellant's stand that service tax was not being paid on account of financial crunch cannot be appreciated in as much as they were collecting service tax from their customers and instead of depositing the same, it was being pocketed. It is evident that they retained the amount and enjoyed the financial accommodation till such time the department initiated action. Even if it is assumed that tax was not being deposited on account of financial difficulties, nothing stopped the appellant to file the statutory returns disclosing their liability to pay service tax, in which case, it would have been a case of delayed payment and not of non-payment. The fact of non-disclosure and non-filing of returns leads to the inevitable conclusion that the appellant was doing so with malafide intention, in which case, there is clear mandate of law contained in the provisions of Section 78, for imposition of penalties - there is a clear mandate of law provided under Section 78 of the Finance Act, 1994 that any person, who has not paid or short-paid the tax on account of any fraud; collusion; willful mis-statement; or suppression of facts or has evaded any tax provisions with an intent to evade payment of duty would be liable to equal amount of penalty. The appellant's claim of invocation of Section 80 of the Finance Act, 1994 can also not be appreciated in as much as, the said section applies only if the assessee proves that there was reasonable cause" for the failure to deposit and that reasonable cause has to be bonafide. The appellant, in the present case, is a registered service provider and is paying service tax on the value of the service. It is only that such value was not being fully disclosed, with a malafide intention to evade payment of service tax on the same. As such, there was no reasonable cause on the part of the appellant to believe that the service tax was not required to be paid - the said section is also not applicable to them. The appellant's claim to reduce the penalty to 25% in terms of the proviso to Section 78 can also not to be appreciated in as much as, the benefit of reduced penalty can be extended only if the entire service tax along with interest and along with 25% penalty is deposited within 30 days of the passing of the order of determination of service tax. Appeal dismissed - decided against appellant.
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