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2016 (8) TMI 1123 - CESTAT MUMBAINon fulfilling the obligation to deposit the collected tax to the Government of India - penalty imposed - Held that:- The provisions of Finance Act 1994 and the rules framed therein require deposit of tax by the 5th of the following month. There is no requirement to deposit tax on the date of collection but can be held within the business enterprise till the stipulated date. It would appear that the appellant-assessee had discharged the tax liability belatedly and without waiting for a show cause notice by borrowing from a bank. The sole ground for imposing penalty against the service provider has been their breach of obligation to deposit the tax collected. No reason to disbelieve their claim of inability to pay tax owing to lack of funds. Such possibilities can and do occur in the world of business. That, however, does not confer immunity from being proceeded against for failure to comply with tax obligations. There is also no doubt that there is an obligation cast upon every service provider to collect the tax due through the service recipient and deposit the amount with the exchequer. However, the law does contemplate and is not averse to use of the tax so collected within the business till the stipulated date for payment. That this period was unilaterally extended by the assessee is not in dispute. Yet, the contention of the assessee that delay is not evidence of intention to evade tax is not one that can be dismissed out of hand. A delay is, without doubt, a delay but, in the absence of any other convincing evidence, is more reflective of lack of promptitude than deliberate evasion. Tax and interest were paid without waiting for a show cause notice by recourse to loan from a bank. The need to issue notice is, therefore, questionable and taxability before May 2006 is a matter of doubt. Thus we are of the opinion that this is a fit case for invoking of the provisions of section 80 to set aside the penalties imposed.
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