2015 (12) TMI 1600 - AT - Service Tax

Appellate Tribunal modifies penalties in tax appeal decision, sets aside Section 78 penalty, upholds Sections 76 & 77.

M/s. Perfect Securities Services Versus Commissioner of Service Tax, Ahmedabad

M/s. Perfect Securities Services Versus Commissioner of Service Tax, Ahmedabad - 2016 (45) S.T.R. 452 (Tri. - Ahmd.) Issues:1. Failure to file ST-3 returns and pay service tax dues.2. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994.3. Appeal against penalties imposed by the original adjudicating authority and confirmed by the Commissioner (Appeals).Issue 1: Failure to file ST-3 returns and pay service tax duesThe appellant, a registered service provider for Security Services, failed to file ST-3 returns and pay service tax dues for the periods from October 2004 to March 2005 and April 2005 to September 2005. The audit party of the department discovered this non-compliance, leading to the appellant paying the outstanding service tax and interest amounts. A show cause notice was issued, and the Additional Commissioner confirmed the demand under Section 73(i) of the Finance Act, 1994. The original adjudicating authority directed the adjustment of the tax payment, imposed penalties under various sections, and ordered the recovery of interest on delayed payments. The appellant's appeal against this decision was rejected by the Commissioner (Appeals), prompting the appellant to approach the Appellate Tribunal CESTAT AHMEDABAD.Issue 2: Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994The appellant argued that they had paid almost 99% of the service tax dues before the show cause notice was issued, with the remaining amount paid soon after. They claimed the short payment was due to a calculation error and requested the penalties to be set aside. The Tribunal observed that while the tax liability was undisputed and most of the amount was paid before the notice, penalties under Section 78 were deemed unwarranted. However, penalties under Sections 76 and 77 were upheld due to the failure to file ST-3 returns and pay the service tax dues despite being aware of the obligations. The Tribunal directed the adjudicating authority to quantify the penalties in line with the impugned order-in-original.Issue 3: Appeal against penalties imposed by the original adjudicating authority and confirmed by the Commissioner (Appeals)The Tribunal, after considering arguments from both sides and examining the records, concluded that while the penalty under Section 78 was set aside, penalties under Sections 76 and 77 were justified. The appellant's compliance with tax payments before and after the notice was taken into account, leading to a modification of the impugned orders to reflect the Tribunal's decision. The appeal was allowed with the specified modifications, providing clarity on the penalties to be imposed.---