2008 (9) TMI 224 - HC - Service Tax

Revenue's appeal dismissed, penalty reduced for service tax delay, minimal revenue effect noted.

The Allahabad HC dismissed the revenue's appeal against the reduction of penalty on State Bank of India for service tax delay. Penalty reduced from Rs. ... Penalty for delay in deposit of service tax - waiver of penalty on establishment of reasonable cause under Section 80 of the Finance Act - non-entertainment of appeal on account of minimal revenue effectNon-entertainment of appeal on account of minimal revenue effect - Whether the Court should entertain the revenue appeal where the revenue effect is negligible. - HELD THAT: - The Court noted that the penalty imposed on the respondent for delay in depositing service tax was reduced on appeal and that the revenue's present appeal concerns only a very small monetary effect. Having regard to the insubstantial revenue consequence, the Court expressed unwillingness to entertain the appeal and dismissed it. [Paras 1]Appeal dismissed on the ground of negligible revenue effect.Waiver of penalty on establishment of reasonable cause under Section 80 of the Finance Act - Whether penalty for delayed deposit of service tax can be waived where reasonable cause is shown under Section 80 of the Finance Act. - HELD THAT: - The Court observed that Section 80 of the Finance Act permits waiver of the penalty if a reasonable cause for failure to deposit service tax within the stipulated period is established. This statutory provision was relied upon as an additional ground for not entertaining the appeal, indicating that the possibility of penalty waiver on proof of reasonable cause militates against sustaining the revenue's challenge. [Paras 3]Section 80 permits waiver of the penalty on establishment of reasonable cause; this furnished an additional ground for refusing to entertain the appeal.Final Conclusion: The appeal by the Revenue is dismissed as the revenue effect is negligible and, additionally, Section 80 of the Finance Act allows waiver of penalty on proof of reasonable cause. The Allahabad High Court dismissed the appeal by the revenue against the reduction of penalty imposed on the State Bank of India for delay in depositing service tax. The penalty was reduced from Rs. 11,179 to Rs. 5,000, and the Tribunal's decision was upheld. The Court cited that the revenue effect was only Rs. 600 and noted that under Section 80 of the Finance Act, the penalty could be waived for reasonable cause.