Tribunal upholds initial penalty, sets aside enhanced penalty for delayed service tax payment

The tribunal allowed the appeal in favor of the appellant, upholding the initial penalty of Rs. 2,000 imposed by the adjudicating authority for delayed payment of service tax. The tribunal set aside the enhanced penalty of Rs. 17,284 imposed by the Commissioner of Central Excise, considering the appellant's prompt payment of the service tax before the show cause notice and the bona fide manner in which the newly registered firm had acted.

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Issues: Penalty for delayed payment of service tax

Analysis:
The case involves a penalty imposed on the appellant for delayed payment of service tax. The appellant obtained registration for providing "Scientific & Technical Consultancy" services after the introduction of service tax on such services. The appellant deposited the service tax for the period from August 2001 to November 2001 before the show cause notice was issued. The adjudicating authority initially imposed a penalty of Rs. 2,000, which was later enhanced to Rs. 17,284 by the Commissioner of Central Excise.

The learned D.R. cited a precedent where a penalty of Rs. 100 per day was imposed for failure to pay tax after the due date. However, upon review, the tribunal found that the appellant, being a newly registered firm, acted in a bona fide manner by depositing the entire service tax before the show cause notice. Therefore, the tribunal upheld the initial penalty of Rs. 2,000 imposed by the adjudicating authority and set aside the enhanced penalty by the Commissioner of Central Excise. The appeal was allowed in favor of the appellant.

In conclusion, the tribunal considered the circumstances of the case, the timing of registration, and the prompt payment of service tax by the appellant before making its decision to uphold the lower penalty amount and overturn the enhanced penalty imposed by the Commissioner of Central Excise.

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