2018 (12) TMI 306 - AT - Service Tax

Benefit of reduced Penalty u/s 78 of FA - part payment of tax made before issuance of SCN and part payment with interest made after issuance of SCN - Held that - It is settled position that the assesee is required to be given an option by the adjudicating authority whether he is willing to pay the duty with interest and 25% penalty within 30 days from the date of adjudication. Whenever such option is not given, the facility of paying reduced penalty by fulfilling the condition of deposition of the same with interest within 30 days (along with tax dues if any) should be granted. In the instant matter despite the fact that the Appellant has discharged the amount of Service Tax along with interest before passing the order by the Original Authority, the option about the reduced penalty has not been given to the Appellant - In the interest of justice the said option is extended to the Appellant and if the Appellant so desired he can deposit the reduced penalty of 25% within a period of 30 days from the date of communication of this order. Failing which he has to pay 100% penalty i.e. ₹ 1,95,692 after the expiry of 30 days. Appeal disposed off.

Summary

Issues:
Whether the appellant is liable to pay the penalty under section 78 of the Finance Act, 1994.

Analysis:
The appellant, a professional player associated with the Indian Premier League (IPL) and other tournaments, received a total consideration but failed to pay the Service Tax due to lack of awareness. Upon initiation of the department's enquiry, the appellant registered for Service Tax, made partial payment, and eventually paid the entire Service Tax along with interest before the adjudicating order. Despite this, the penalty under section 78 was imposed by the Commissioner. The appellate tribunal noted that the appellant was not given the option to deposit 25% of the penalty amount, even though the entire Service Tax with interest was paid before the adjudicating order. It was emphasized that the appellant should have been given the choice to pay the reduced penalty within 30 days from the date of adjudication. The tribunal highlighted the necessity of granting such an option when the authorities fail to provide it. Consequently, the tribunal extended the option to the appellant to deposit the reduced penalty of 25% within 30 days from the date of the order, failing which the full penalty amount would be applicable after the specified period.

In conclusion, the tribunal disposed of the appeal by emphasizing the importance of providing the appellant with the opportunity to pay the reduced penalty within the stipulated timeframe, considering the appellant's timely payment of the Service Tax and interest before the adjudicating order.