2013 (7) TMI 702 - AT - Service Tax

CESTAT Bangalore: Penalties under Finance Act, 1994 addressed

The Appellate Tribunal CESTAT Bangalore addressed penalties under the Finance Act, 1994, in a case involving recovery agents liable for service tax. ... Penalty u/s 76, 78 and 79 – assessee provided the service as recovery agent and it became liable to service tax - Held that:- The invocation of Section 80 for not imposing penalties u/s 76 and 78 would be proper – the assessee had shown reasonable cause for setting aside the penalty imposed on the them –firm is a proprietor concern and it is quite possible that the proprietor might have missed the notification or the introduction of new service - the family problems like mother suffering from cancer and daughter suffering can cause difficulties to any person – penalty imposed under Section 77 is upheld – decided in favour of assessee. Issues:Imposition of penalties under various Sections of the Finance Act, 1994.Analysis:The judgment by the Appellate Tribunal CESTAT Bangalore dealt with the issue of imposing penalties under various Sections of the Finance Act, 1994. The case involved the appellants providing services as recovery agents to their customers, becoming liable for service tax from 1.5.2006. Investigations in 2008 led to the appellants discharging the entire service tax amount between February 2009 to October 2009. Subsequently, proceedings were initiated in 2011, demanding service tax, interest, and proposing penalties. The original authority dropped the penalty proceedings, but on appeal by the Revenue, the Commissioner (A) imposed penalties under Sections 76, 77, and 78.The Tribunal noted that the main issue was the imposition of penalties under the Finance Act. Despite being a stay application, the Tribunal decided to hear the appeal on its merits without requiring a pre-deposit. The Tribunal proceeded to hear both sides on the matter.The advocate for the appellants acknowledged the service tax liability, which had been paid. The dispute centered around the imposition of penalties. The advocate cited personal hardships faced by the appellant, such as the mother's illness and the daughter's health issues during the relevant period.Considering the circumstances, the Tribunal found that invoking Section 80 to not impose penalties under Sections 76 and 78 was appropriate due to the reasonable cause shown by the appellant. However, regarding the penalty under Section 77, the Tribunal upheld the penalty of Rs.10,000, as it found no merit in the appeal due to delays in filing returns despite having registration since 2004.In conclusion, the Tribunal disposed of the stay application and the appeal, with the penalties under Sections 76 and 78 set aside due to reasonable cause shown by the appellant, while the penalty under Section 77 was upheld.