Appeal success: Penalty waived, late fee maintained for service tax liability exceeding turnover limit

The appeal challenged the imposition of penalty under Section 78 and late fee for service tax liability exceeding the turnover limit in 2011-12. The Member (Judicial) found the appellant eligible for immunity under Section 73(3) of the Finance Act, 1994, due to prompt payment upon department notification and lack of mala fide intent. Consequently, the penalty under Section 78 was waived, but the late fee was maintained as per the Commissioner's order. The appeal was partly allowed, resulting in the waiver of penalty and retention of the late fee.

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Issues:
Imposition of penalty under Section 78 and late fee.

Analysis:
The appeal challenged the Order-in-Appeal maintaining the penalty under Section 78 and late fee imposed by the original adjudicating authority. The appellant provided taxable services to two entities, crossing the turnover limit in 2011-12, resulting in a service tax liability of Rs. 1,82,602 along with interest. The Commissioner upheld the demand of service tax and penalty under Section 78 but kept the late fee in abeyance until returns were filed. The appellant contended that the show cause notice should not have been issued as they promptly paid the service tax and interest upon department notification, citing inadvertence due to turnover crossing the limit in 2011-12.

The appellant's counsel argued no mala fide intent to evade payment, emphasizing the turnover was below the threshold in previous years. The Revenue's representative supported the impugned order's findings. The Member (Judicial) noted the appellant's non-regular defaulter status, attributing the liability solely to exceeding the exemption limit in 2011-12. Acknowledging the immediate payment of service tax upon department notification, the Member found the appellant eligible for immunity under Section 73(3) of the Finance Act, 1994. Considering the circumstances, the Member waived the penalty under Section 78 but maintained the late fee as per the Commissioner's order. The appeal was partly allowed with the penalty waiver and late fee retention.

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