2009 (3) TMI 119 - AT - Service Tax

Penalty - Delayed seeking registration and Delayed Payment of Service Tax - Outdoor Catering Service Commissioner (Appeals) has stated that ignorance of law is no excuse and confirmed the penalty Tribunal held that this itself means that the Revenue is of the view that the applicant was ignorant about his tax liabilities. If that be so the provisions of Section 80 would come into play penalty set aside

Summary

Issues: Penalty under Section 78 of the Finance Act, 1994

Analysis:
The appellant, running a canteen in a factory providing outdoor catering services, approached the Revenue in 2007 for registration after being unaware of their tax liabilities. They paid the due duty along with interest. The challenge in the appeal was against the penalty imposed under Section 78 of the Finance Act. The appellant argued that they believed they were not covered under the service tax due to being a canteen, not a catering service, invoking Section 80 to avoid penalty.

The Revenue contended that it was the appellant's duty to register and pay taxes, emphasizing the lack of evidence regarding the appellant's bona fides. The Commissioner (Appeals) invoked Section 78, stating ignorance of the law is not an excuse. However, the appellant genuinely believed that running a canteen did not fall under the definition of 'outdoor caterer,' supported by the fact that the tax paid was reimbursable to the factory as input credit. The tribunal found merit in the appellant's belief, invoking Section 80 of the Finance Act to waive the penalty under Section 78.

The tribunal concluded that the appellant's genuine belief, lack of intention to evade tax, and the tax being reimbursable to the factory justified invoking Section 80, thereby setting aside the penalty imposed under Section 78. The appeal was disposed of in favor of the appellant, and the stay petition was also resolved accordingly.