Tribunal upholds penalty for non-payment of service tax despite late payment & rejects appellant's taxability argument.

The Tribunal upheld the penalty imposed on the appellant for non-payment of service tax, despite later payment, due to failure to disclose collected service tax. Additionally, the Tribunal confirmed the demand for services categorized as 'information technology software service,' rejecting the appellant's argument that the services provided should not be taxable under the Finance Act. The appellant's plea regarding the timing of raising the taxability issue was dismissed, and the appeal was rejected for lacking merit.

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Issues:
1. Imposition of penalty for non-payment of service tax.
2. Taxability of services under the category of 'information technology software service'.

Imposition of penalty for non-payment of service tax:
The appellant was engaged in providing services related to website design development and networking solutions. They were issued a show cause notice for non-payment of service tax amounting to Rs. 31,14,678 for the period October 2007 to March 2010. The appellant did not dispute the liability but challenged the penalty imposition, arguing that they had paid the entire service tax amount along with interest before the notice was issued. However, the Revenue contended that the appellant collected service tax from customers but did not remit it to the government, thus justifying the penalty under Section 78 of the Finance Act. The Tribunal upheld the penalty, stating that even if the appellant paid the amount later, the penalty cannot be waived due to the failure to disclose the collected service tax to the department.

Taxability of services under the category of 'information technology software service':
The appellant disputed the demand of Rs. 8,12,493 for the period 16.5.2008 to 31.3.2010 under the category of 'information technology software service'. They argued that the services provided, such as web hosting and domain name registration, should not be considered taxable under the Finance Act, 1994, as they were merely reselling web space obtained from a data center. The Revenue, however, maintained that these were taxable services and the appellant had consistently maintained their stand despite not paying the tax under a misconception of law. The Tribunal agreed with the Revenue, stating that the services fell under the taxable category of 'information technology software service' and confirmed the demand with interest and penalty. The appellant's plea that they had not raised the issue of taxability earlier was rejected, and the appeal was dismissed for lacking merit.

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