Advertising agency penalized for late service tax payment; Tribunal upholds penalty of Rs. 2.66 lakhs

The Tribunal upheld the imposition of a penalty on an advertising agency for late payment of service tax, amounting to Rs. 2.66 lakhs. The agency's history of repeated delays in tax payment and the substantial total amount of late service tax deposits were considered in determining the penalty, despite the appellant's arguments of financial difficulties and non-payment by customers. The Tribunal found the penalty appropriate and not excessive, rejecting the appeal against the Commissioner (Appeals) decision.

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Issues Involved: Imposition of personal penalty for late payment of service tax by an advertising agency.

Summary:

Issue 1: Imposition of Personal Penalty
The appellant, an advertising agency, faced proceedings for late payment of service tax between May 1997 to September 1999. The Assistant Commissioner imposed a penalty of Rs. 2.64,400/- at the rate of Rs. 100/- per day for delays ranging from 2 to 276 days. The Commissioner (Appeals) upheld this decision, leading to the current appeal.

Details:
The appellant argued that the delays were due to financial difficulties and non-payment by customers, citing Section 80 of the Finance Act, 1994, as providing genuine reasons for the delays. However, the JDR contended that the appellant had a history of repeated delays in tax payment, making them a habitual offender. The Tribunal noted that the appellant registered in November 1996 and was aware of their tax obligations. The Tribunal found that the delays occurred almost every month, totaling a late service tax deposit of approximately Rs. 1,36,00,000/-. The penalty of Rs. 2.66 lakhs was deemed appropriate and not excessive, leading to the rejection of the appeal.

Conclusion:
The Tribunal upheld the imposition of the penalty on the advertising agency for late payment of service tax, considering the history of delays and the substantial amount involved.

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