2006 (12) TMI 503 - AT - Service Tax

Tribunal cancels penalties for late Service Tax payment citing CBEC circular, grants relief

The Tribunal set aside penalties imposed under Section 76 and Section 77 of the Finance Act, 1994 on the appellant for failing to pay Service Tax on time. ... - Appellant, a goods transport agency registered for service tax, was penalized under Section 76 (Rs. 51,481) and Section 77 (Rs. 1,000) of the Finance Act, 1994 for late payment of service tax for Jan-Mar 2005. Appellant paid the tax with interest on 5-10-2005; a show-cause notice was issued on 9-11-2005. Reliance was placed on Board letter F. No. 341/18/2004-TRU dated 17-12-04: 'In case of omission in payment of service tax... committed before 31-12-2005, the consequences should be limited to recovery of tax with interest payable thereon. No penalty should be imposed... unless the default is on account of deliberate fraud, collusion, suppression of facts or willful mis-statement or contraventions... with intent to evade payment of service tax.' Tribunal precedent was cited that 'Show Cause Notice is not required to be issued in terms of Section 73 (2A) of Finance Act, 1994, when the tax has been paid by the assessee on his own ascertainment and, therefore, no penalty can be imposed in such cases.' Finding tax and interest were paid before issuance of the show-cause notice and no allegation of fraud or willful evasion, the penalty was set aside and appeal allowed with consequential relief.