2004 (8) TMI 3 - AT - Service Tax

Penalty Overturned for Delayed Service Tax Due to Bona Fide Confusion; Prompt Payment with Interest Accepted

The CESTAT, Bangalore, upheld the Commissioner's decision to set aside a penalty of Rs. 1,03,200/- for delayed service tax payment, citing the assessee's ... Service Tax – Assessee unaware to the service tax being a new levy – Service tax and interest deposited by the assessee, action of assessee bona fide – Exorbitant penalty not imposable In the case before the CESTAT, Bangalore, the Revenue appealed against the Order-in-Appeal No. 496/2000-C.E., dated 6-9-2000, which set aside a penalty of Rs. 1,03,200/- imposed for the delayed payment of service tax amounting to Rs. 13,731/-. The Commissioner had noted that the delay was due to confusion about the new levy, and the assessee promptly paid the tax with interest upon realization. The Tribunal referenced the case of Smitha Shetty v. CCE, Bangalore, where it was held that penalties should not be imposed for technical or judicial breaches or when the breach arises from a bona fide belief. The Tribunal also considered the ruling in Hindustan Steel v. State of Orissa, which stated that penalties should not be imposed unless the party acted deliberately in defiance of the law. The Tribunal found the Commissioner's decision to set aside the penalty justified, as the assessee's actions were bona fide, and rejected the Revenue's appeal.