Appeal against late service tax filing penalty by tour operators; penalty reduced due to ignorance

The appeal was filed against the penalty imposed for late filing of service tax returns. The appellants, petty tour operators, claimed ignorance of the filing requirement due to an exemption from service tax for tour operators. The Revenue argued the delay was due to late tax collection. The Member (T) acknowledged the delay, attributing it to ignorance among assesses. The penalty was reduced to Rs. 2,000 from Rs. 100 per day.

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Issues:
Challenge against imposition of penalty for late filing of service tax returns.

Analysis:
The appeal was filed against the penalty imposed by the Commissioner (Appeals) for late filing of service tax returns. The appellants did not dispute the levy and recovery of service tax and interest. They argued that as petty tour operators, they were not aware of the requirement to file returns after depositing the tax collected from customers. They claimed ignorance of the need to submit ST-3 returns due to an exemption from service tax for tour operators from July 1998. The appellants highlighted their minimal tax liability per quarter, ranging from Rs. 422 to Rs. 487. They contended that the penalty of Rs. 100 per day for late filing was excessive, especially considering their lack of awareness and absence of prior notice from the department. They cited precedents where penalties were reduced for similar reasons and referred to a Ministry scheme offering penalty waivers for service providers registering belatedly due to ignorance.

The Revenue argued that the delay in filing returns was solely due to the appellants' late collection of service tax from customers, emphasizing that the appellants had registered in December 1997 and should have been aware of the filing requirements. They supported upholding the lower authorities' decision on the penalty.

After considering both parties' submissions, the Member (T) acknowledged the delay in filing returns, noting that the appellants had paid the service tax with interest. Recognizing the initial lack of awareness among assesses regarding service tax provisions and return filing procedures, the Member attributed the delay to ignorance and hesitation among petty assesses despite efforts by departmental officers to educate them. Consequently, the penalty for late filing of service tax returns was reduced to Rs. 2,000. The appeal was disposed of accordingly, with the order pronounced on 5th December 2005.

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