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2018 (10) TMI 268 - AT - Service TaxFailure to deposit the service tax collected from clients though reflected in the ST-3 return - Security Agency Services - Commercial Training and Coaching services - it was alleged that service tax paid by the appellant was not commensurate with the amounts received during the corresponding periods - Demand of Service Tax alongwith Interest and Penalty - Extended period of limitation - Simultaneous penalty u/s 76 and 78 - Financial hardship Held that:- The plea advanced by the appellants for not depositing the tax is on account of financial hardship. If such plea is entertained, then not only the scheme of indirect taxation will be impacted but the entire mechanism of fair trade and commerce will collapse. Can really financial hardship, be the reason for holding on the money collected from the customer/ client be valid reason for nonpayment of tax due to the government. In the scheme of indirect taxation the tax depositor is only a conduit for depositing the tax collected from the recipient of taxable service to the government - the amounts collected as tax from the customer/ client are not the money in the hand of tax payer but only held in trust by the said taxable person for the period and to be deposited with revenue in manner as prescribed by the taxing statue. By not depositing the said amounts in the manner as have been provided by law, Appellants have misappropriate the funds held by them in trust for their personal gain and should not be allowed the plea of financial hardship. Financial hardship cannot be reason to justify such misappropriation of the money which was never held as the money by the appellant - demand upheld. Extended period of limitation - Penalty - Held that:- It is quite evident that appellants have been collecting the service tax from their customers/ clients but were not depositing the same with the exchequer. They were rotating the amounts collected as tax for their personal gains. They were also guilty of not filing the returns on due date to declare their tax liabilities and hence they have definitely suppressed the details of tax collected and payable to the exchequer. Thus demands made invoking extended period as provided by proviso to section 73(1) is justifiable and for the same reasons appellants liable to penalty under Section 78 of the Finance Act, 1994 - Further for various contraventions such as not payment of tax by the due date and delay in filing the returns for the period prior to 2008, simultaneous penalties under Section 76 also justified - penalty u/s 77 also upheld. Benefit of reduced penalty - Held that:- The option to pay penalty to extent of 25% at the Appellate stage cannot be allowed. Appeal dismissed - decided against appellant.
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