2008 (7) TMI 185 - AT - Service Tax

Failure to pay tax & file returns - service provider registered with the department as early as on 10-9-2003 and paid the service tax on 10-9-2003 for the period from 4/2001 to 7/2002. The period covered in this case is in continuation of the abovementioned period. Therefore there is no reason for him to have discontinued the payment of service tax hence penalty limiting to 25% is imposable in case mala fide not proved penalty is set aside - appeal is partly allowed

Summary

Issues:
1. Waiver of penalties imposed under Sections 76, 77, and 78 of the Finance Act, 1994 by the Commissioner (Appeals).

Analysis:
The case involved an appeal by the Revenue against the Order-in-Appeal issued by the Commissioner of Central Excise (Appeals), Mangalore. The respondent, a Service Tax Registration holder, provided Rent-A-Cab services to M/s. BSNL and failed to pay the service tax on the taxable value received. The Assistant Commissioner confirmed the demand for service tax, interest, and penalties under Sections 76, 77, and 78 of the Act. The respondent appealed to the Commissioner (Appeals) seeking a waiver of the imposed penalties, which was granted. The Revenue challenged this decision, arguing that the penalties were wrongly waived based on the lack of reasonable cause for non-payment of service tax and the alleged deliberate suppression to evade tax liability.

The Commissioner (Appeals) had accepted the respondent's contention that there was no mala fide intention to evade service tax and that the lapses were excusable under Section 80 of the Act. However, the Revenue contended that the respondent's registration with the department and prior payment of service tax indicated a deliberate attempt to evade tax payment. The Tribunal found merit in the Revenue's argument, noting that the respondent should have continued to pay service tax for the subsequent period as well. Considering the circumstances, the Tribunal ordered a penalty limited to 25% of the service tax amount under Section 78 of the Act, emphasizing that this penalty would serve the interests of justice.

In conclusion, the Tribunal allowed the appeal in part, overturning the Commissioner (Appeals)'s decision to waive the penalties and ordering the payment of a penalty limited to 25% of the service tax amount. The Tribunal's decision was based on the finding that there was deliberate suppression with intent to evade service tax liability, justifying the imposition of a penalty under Section 78 of the Act.