Service tax return delay penalty reduced after Tribunal followed earlier relief for similarly placed clearing and forwarding agents.

Penalty for delayed filing of service tax returns by clearing and forwarding agents under Section 77 was found excessive in light of an earlier Tribunal order involving similarly placed assessees. The Tribunal relied on the early stage of service tax implementation and the fact that the clients had discharged the tax liability as relevant relief factors. Following the same reasoning for identical delay and explanation, it reduced the penalty and limited interference to that extent.

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Issues: Whether the penalty imposed under Section 77 of the Finance Act, 1994 for delayed filing of service tax returns by clearing and forwarding agents required interference.

Analysis: The Tribunal noted that the same issue had already been decided in an earlier order involving similarly placed assessees. It relied on that reasoning, which treated the early phase of service tax implementation and the discharge of tax liability by the clients as relevant considerations for granting relief. In view of the identical delay and reasons, the Tribunal followed the earlier view and considered the penalty excessive.

Conclusion: The penalty was reduced from Rs. 10,800 to Rs. 2,000, and the appeal was dismissed subject to that modification.

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