2018 (11) TMI 496 - AT - Service Tax

Tribunal grants Section 80 benefits for timely tax payment, partially allowing appeal

The Tribunal partially allowed the appeal, recognizing the appellant's compliance with tax payment and penalty deposit within the stipulated period, ... Non-payment of Service tax - Cargo Handling Service - appellant had collected Service Tax from their clients but not paid to Government - service tax with interest paid on being pointed out before issuance of SCN - Held that:- The appellants have paid the Service Tax, interest and 25% of the penalty within the stipulated period and is entitled to the benefit of Section 80 to the extent of remaining 75% of the penalty - appeal disposed off. Issues:- Appeal against rejection of appeal by Commissioner (A)- Allegations of non-payment of Service Tax- Imposition of penalties under Section 77 and 78- Benefit of Section 80 of the Finance ActAnalysis:1. The appeal was filed against the rejection of the appellant's appeal by the Commissioner (A). The appellant, a partner in a firm, was alleged to have not paid Service Tax on services rendered post-April 2009. The firm had collected Service Tax from clients but failed to remit it due to financial crisis, leading to a show cause notice (SCN) citing suppression of facts to evade tax. The original authority confirmed the demand, imposed penalties under Section 77 and 78, which the Commissioner (A) upheld.2. The appellant argued that the order was unsustainable as the Managing Partner's illness caused the delay in tax payment. The appellant paid the entire Service Tax and interest before the SCN issuance, challenging the penalty imposition for lack of suppression of facts. Several legal precedents were cited to support the appellant's claim, emphasizing timely tax payment and absence of intent to evade tax.3. The AR contended that the appellant collected but withheld Service Tax, negating the applicability of Section 80 benefits. However, the Tribunal noted that the Service Tax was eventually paid along with interest, before the SCN, and 25% of the penalty within 30 days. Despite this, the authorities did not grant the appellant the benefit of Section 78, which would have reduced the penalty amount. Consequently, the Tribunal partially allowed the appeal, recognizing the appellant's compliance with tax payment and penalty deposit within the stipulated period, entitling them to Section 80 benefits for the remaining penalty amount.4. The Tribunal's decision, delivered by MR. S.S GARG, Judicial Member, on 06/11/2018, acknowledged the appellant's actions in paying the tax, interest, and a portion of the penalty promptly. As a result, the appeal was partly allowed, granting relief to the appellant in accordance with the provisions of the Finance Act.