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2019 (1) TMI 1041 - AT - Service TaxPenalty u/s 76 and 78 of FA - Non-payment/delayed payment of Service Tax - period from 10/2002 to 2/2009 - the appellant has been continuously defaulting the payment of Service Tax over the years and periodical SCNs have been issued - Held that:- The delay in payment of Service Tax by itself would not reveal intent to evade payment of duty and for the reason that there has been a delay in payment of Service Tax, fraud, suppression, collusion, etc. cannot be alleged. The statute has provided for payment of interest for delayed payment of Service Tax. It means that statute has provided for cases/situations where there is a possibility of payment of Service Tax. Moreover, there is a penalty under Section 76 for delayed payment. Therefore, invoking of Section 78 for delayed payment in itself is not acceptable. The penalty under Section 78 for the period 10/2002 to 8/2007 was either not proposed or dropped by Commissioner and for the period 5/2008 to 2/2009, penalty under Section 78 has not been proposed at all in the SCN. This being the situation, proposal and confirmation of penalty under Section 78 during the period 9/2007 to 10/2007 alone defies logic as there was no change in the circumstances or the procedure adopted by the appellants. The ingredients of Section 78 are not fulfilled as no suppression, fraud etc. can be alleged where the Department is well aware of the practice adopted by the appellants and SCNs have been issued continuously. As discussed above, penalty under Section 78 was not even proposed in the subsequent SCNs - penalty u/s 78 not imposable - However, due to continuous default in payment of Service Tax, the appellants are liable to pay penalty imposed under Section 76. The appeals are partly allowed by confirming duty demanded and penalty imposed under Section 76. However, penalty imposed under Section 78 of the Finance Act, 1994 is set aside.
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