2010 (3) TMI 216 - AT - Service Tax

Waiver of penalty section 80 penalty imposed u/s 76 and 78 commissioner (appeals) waived the penalty on the ground that there was a confusion in the mind of the assessee since Southern Region Petroleum Corporation Contractors Welfare Association was taking steps to move the High Court regarding levy of service tax held that it cannot be held that the assessees were guilty of suppression with intention to evade payment of tax so as to make them liable to penalty under Sections 76 and 78 of the Finance Act 1944. order of waiver of penalty upheld

Summary

Issues: Setting aside of penalties under Sections 76 and 78 of the Finance Act, 1994 based on reasonable cause and protection under Section 80.

The judgment by the Appellate Tribunal CESTAT, CHENNAI, dealt with the appeal filed by the Revenue against the setting aside of penalties imposed on the assessees under Sections 76 and 78 of the Finance Act, 1994. The Tribunal considered whether the assessees had established a reasonable cause for their failure to pay the service tax leviable within the stipulated time and whether they were entitled to the protection under Section 80 of the Finance Act.

The Tribunal noted that Section 80 of the Finance Act provides that no penalty shall be imposed on the assessee if they prove a reasonable cause for the failure to comply with tax provisions. The Commissioner (Appeals) found that the assessees had obtained a registration certificate before the tax levy issue arose and were confused due to legal actions by an association regarding the service tax levy. The Madras High Court had granted an interim stay against the levy of service tax as requested by the association. Consequently, the Tribunal held that the assessees were not guilty of suppression with the intent to evade tax, making them ineligible for penalties under Sections 76 and 78 of the Finance Act, 1994. Therefore, the Commissioner (Appeals) rightly extended the protection under Section 80 of the Finance Act, leading to the Tribunal upholding the impugned order and rejecting the Revenue's appeal.

In conclusion, the Tribunal's decision centered on the assessees demonstrating a reasonable cause for their failure to pay the service tax within the specified time frame and the subsequent application of the protective provisions under Section 80 of the Finance Act, 1994. The judgment highlighted the importance of considering the circumstances and legal complexities faced by the assessees in determining the applicability of penalties under the relevant sections of the Finance Act.