Clerical error in payment date led to recomputation of service tax penalty for only 12 days' delay.

A clerical error in recording the payment date led to an incorrect assumption that service tax was delayed for one year and 12 days. On the record, tax and interest had been paid, and the actual delay was only 12 days. Penalty under Section 76 of the Finance Act was therefore recomputed on the correct period of delay and reduced to Rs. 1,200 at Rs. 100 per day, with relief granted to the assessee to that extent.

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Issues: Whether the penalty imposed under Section 76 of the Finance Act was liable to be reduced from Rs. 37,800 to Rs. 1,200 on the footing that the delay in payment of service tax was only 12 days and that the higher figure resulted from a clerical error in recording the date of payment.

Analysis: The service tax liability related to the period April 2003 to September 2003. The record showed that the tax and interest had been paid, but the date of payment was inconsistently recorded as 6.11.03 and 6.11.04 in the reply and the subsequent orders. On examining the record, the later date was found to be a clerical mistake, and the delay was held to be only 12 days rather than one year and 12 days. The penalty had therefore been computed on an erroneous basis.

Conclusion: The penalty under Section 76 of the Finance Act was reduced to Rs. 1,200, being Rs. 100 per day for 12 days' delay, and the appeal was allowed to that extent in favour of the assessee.

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