Tribunal reduces penalty for service tax return non-filing, adjusts to Rs. 18,000, exempts nil returns.

The Tribunal reduced the penalty imposed on the appellant for failure to file service tax returns from Rs. 1,80,000 to Rs. 18,000. The penalty was recalculated at Rs. 2,000 per return for six returns and Rs. 6,000 for a specific period, with exemptions for nil returns. The appellant, engaged in transportation services, argued that the increased penalty was not applicable retrospectively to the default period before the relevant amendment. The Tribunal found the original penalty excessive and adjusted it accordingly, with any excess payment to be refunded to the appellant.

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Issues:
Appeal against imposition of penalty under section 70 of Finance Act, 1994 read with Rule 73 of Service Tax Rule 2004 for failure to file service tax returns on time.

Analysis:
The appellant, registered for transportation of goods by road service, challenged the penalty of Rs. 1,80,000 imposed for not filing service tax returns from 2006-07 to 2011-12. The penalty was calculated at Rs. 20,000 per return for 9 returns. The appellant argued that the penalty was imposed under amended provisions effective from 08.04.2011, while the default period was before this amendment. They cited precedents to support their claim that the maximum penalty before the amendment was Rs. 2,000 per return. The appellant contended that the penalty increase was prospective, not retrospective. The AR supported the impugned order.

Upon review, the Tribunal found the appellant liable for penalties totaling Rs. 18,000, considering Rs. 2,000 per return for six returns and Rs. 6,000 for a specific period. Nil returns were exempt from penalties. The Tribunal deemed the penalty of Rs. 1,80,000 excessive and reduced it to Rs. 18,000. The appellant had already paid Rs. 17,500, and any shortfall would be recovered. The decision was delivered on 27/10/2017.

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