2015 (5) TMI 144 - AT - Service Tax

Tribunal upholds penalty for service tax evasion, emphasizing importance of tax compliance and consequences.

M/s. Srinivasa Real Estate Versus CST, Chennai

M/s. Srinivasa Real Estate Versus CST, Chennai - 2017 (49) S.T.R. 406 (Tri. - Chennai) Issues involved:1. Penalty imposed under Section 78 of the Finance Act.Detailed Analysis:The appellant filed an appeal against the penalty imposed under Section 78 of the Finance Act in response to a show cause notice demanding service tax for a specific period. The adjudicating authority confirmed the demand, appropriated amounts already paid, and imposed penalties under various sections of the Finance Act. The Commissioner (Appeals) partially allowed the appeal, setting aside some penalties but upholding the service tax demand, interest, and penalty under Section 78.The appellant argued that there was a genuine dispute regarding the payment of service tax, citing a Board Circular supporting their belief that service tax was not applicable to their construction service. They claimed to have paid the outstanding amount promptly upon notification by the Department. The appellant sought a waiver of penalty under Section 80, referencing relevant case laws to support their position.On the other hand, the Revenue contended that the appellant deliberately withheld information about the service tax collected and filed misleading returns, only rectifying the situation after the Department initiated action. The Revenue highlighted that the Commissioner (Appeals) had already waived penalties under other sections, emphasizing the intentional evasion of service tax by the appellant.The Tribunal carefully reviewed both arguments and noted that the appeal solely concerned the waiver of the penalty under Section 78. The appellant had paid the entire demand with interest before adjudication, but it was evident that they had collected service tax without remitting it and misrepresented facts in their returns. The Tribunal referenced precedents where penalties were upheld for deliberate suppression of facts to evade service tax, emphasizing the mandatory nature of penalties under Section 78. The Tribunal concluded that the appellant's plea for penalty waiver lacked merit, as the penalties under Section 76 and 77 had already been waived. Therefore, the Tribunal upheld the penalty under Section 78 as per the impugned order, ultimately rejecting the appeal.In conclusion, the Tribunal's decision underscored the importance of complying with tax obligations and the consequences of deliberate non-compliance, affirming the penalty under Section 78 of the Finance Act in this case.