Tribunal sets aside penalties for service tax non-payment due to reasonable cause.

The Tribunal partially allowed the appeal, setting aside penalties under Sections 77 and 78 of the Finance Act, 1994, due to the appellant's reasonable cause for non-payment of service tax on renting services. A penalty of Rs. 10,000 was imposed under Section 77(2) for contravention of provisions, while the appellant was held liable for the penalty under Section 77(2) but not under Section 78. The demand for service tax and interest was upheld, with certain penalties being set aside.

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Issues:

1. Appellant provided renting of immovable property services without paying service tax.
2. Dispute regarding payment of service tax on renting services.
3. Applicability of penalties under Sections 78 and 70 of Finance Act, 1994.
4. Benefit of Section 80(2) of the Finance Act, 1994.
5. Failure to file returns during the material period.

Analysis:

1. The appeal challenged an order rejecting the appeal and upholding the Order-in-Original due to non-payment of service tax on renting services. Appellant stopped paying service tax in 2008 but paid dues from October 2008 to March 2012 after being informed by the Department in 2012. The Order-in-Original confirmed service tax demand and penalties under Sections 78 and 70 of Finance Act, 1994.

2. The appellant argued that the impugned order did not consider relevant laws and Tribunal decisions. They contended that service tax with interest was paid before the show-cause notice, and penalties under Section 78 were unjustified due to no willful default. The appellant disclosed information in ST-3 returns, citing a dispute on tax payment by tenants as reason for non-payment.

3. The AR defended the impugned order, stating the appellant couldn't claim benefit under Section 80(2) for failure to pay the total amount. The Tribunal noted a dispute on taxing renting of immovable property, acknowledging the appellant's payment despite not collecting from tenants. Penalties under Sections 77 and 78 were discussed, with a penalty imposed under Section 77(2) for failure to file returns during the material period.

4. Referring to a relevant case, the Tribunal emphasized the appellant's reasonable cause for non-payment, setting aside penalties under Sections 77 and 78. A penalty of Rs. 10,000 was imposed under Section 77(2) for contravention of provisions. The Tribunal concluded that the appellant was not liable for penalty under Section 78, partially allowing the appeal.

5. The Tribunal's decision was pronounced in open court on 04/01/2018, modifying the impugned order by setting aside certain penalties while upholding the demand for service tax and interest. The appellant was held liable for a penalty under Section 77(2) but not under Section 78.

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