2006 (11) TMI 638 - AT - Service Tax

Summary

Issues involved: Penalty for late payment of service tax and late filing of ST-3 returns.

Summary:
The appeal challenged a penalty of Rs. 1,49,900 imposed on the appellant for late payment of service tax and late filing of ST-3 returns related to 'Broadcasting Service'. The appellants were registered with the department but failed to pay the tax on time from July 2001 to July 2002. The tax was later paid by them without a show cause notice. A notice was issued for interest confirmation and penalty imposition, which was paid before the show cause notice. The adjudicating authority imposed a penalty of Rs. 1,49,800, upheld by the Commissioner (Appeals), leading to the present appeal.

The main contention of the appellant was financial crisis during the relevant period causing confusion with advertising agencies about service tax liability. Reference was made to industry-wide issues with tax collection. Despite depositing the tax and interest, the appellant argued that the penalty was unjustified, citing Tribunal decisions waiving penalties in similar situations.

After hearing the arguments, it was found that the appellant, being aware of the tax liability after registration, could not claim the benefit under Section 80 of the Finance Act for a reasonable cause due to financial crisis. However, considering the overall circumstances, including timely tax payment and interest, the personal penalty was reduced to Rs. 25,000. The appeal was rejected except for the penalty modification.

*(Pronounced in Court on 30-11-06)*