2018 (9) TMI 1443 - AT - Service Tax

Tribunal affirms penalties for non-cooperation & tax liability, considering genuineness of doubt.

The Tribunal upheld the imposition of penalties on the appellant for non-cooperation and failure to discharge service tax liability despite registration. ... Penalty u/s 76 and 78 of FA - Intellectual Property Services - Held that:- The appellant authority has already extended the due benefit to the appellant by agreeing with the contentions raised by the appellant and has reduced the confirmed tax amount as also has set aside penalty imposed under Section 76. It is also a fact that the appellants, after registration with the Department did not part with any information, which was being repeatedly asked for by the Revenue and did not discharge any service tax liability - imposition of penalty justified - appeal dismissed - decided against appellant. Issues:1. Service tax liability for providing 'Intellectual Property Services' without payment.2. Imposition of penalties under Sections 76, 77, and 78.3. Applicability of penalties based on the genuineness of doubt regarding service tax obligation.4. Non-cooperative behavior of the appellant in discharging service tax liability after registration.Analysis:Issue 1 - Service tax liability for providing 'Intellectual Property Services' without payment:The appellant was charged with service tax for providing 'Intellectual Property Services' without payment. The original demand of &8377; 2,15,198/- was confirmed against the appellant, along with penalties under Sections 76, 77, and 78. However, on appeal, the Commissioner (Appeals) agreed that no demand could be confirmed for the period before the introduction of intellectual property services in the statute. The demand was reduced to &8377; 1,53,129, and penalties were adjusted accordingly.Issue 2 - Imposition of penalties under Sections 76, 77, and 78:The penalties imposed under Sections 76 and 78 were a subject of contention. The Commissioner (Appeals) accepted the appellant's plea that penalties cannot be imposed simultaneously under both sections. Consequently, the penalty under Section 76 was set aside, and the penalty under Section 78 was reduced to the service tax demand amount, along with a reduction in the penalty under Section 77.Issue 3 - Applicability of penalties based on the genuineness of doubt regarding service tax obligation:The appellant's representative argued that there was a genuine doubt regarding their obligation to discharge service tax, and in the absence of any mala fide intention, penalties should not be imposed. However, the Revenue contended that the appellant's non-cooperative behavior, despite registration with the Service Tax Department, justified the imposition of penalties.Issue 4 - Non-cooperative behavior of the appellant in discharging service tax liability after registration:The appellant failed to provide required information to the Revenue even after registration and did not discharge their service tax liability. This behavior was considered non-cooperative, reflecting mala fide intentions according to the Revenue. The Tribunal upheld the imposition of penalties based on this non-cooperative conduct.In conclusion, the Tribunal rejected the appeal, upholding the imposition of penalties on the appellant for non-cooperation and failure to discharge the service tax liability despite registration. The decision was based on the findings of the Commissioner (Appeals) and the non-compliance of the appellant with the Revenue's requests for information and tax payment.