Court upholds penalty for deliberate non-payment of service tax despite financial difficulties.

The Court upheld the penalty imposition under Section 78 of the Finance Act, 1994, on the appellant for deliberate non-payment of service tax despite awareness of tax liability, citing financial difficulties as the reason. The appellant's argument against penalty based on lack of willful suppression was rejected, with the Court emphasizing the intentional contravention to evade tax payment. The Court dismissed the appeal, finding no substantial question of law and affirming the Tribunal's penalty order.

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Issues:
Challenge to order imposing penalty under Section 78 of the Finance Act, 1994.

Analysis:
1. The appellant, engaged in providing taxable services, was found to have not paid service tax from December 2011 onwards during a surprise visit by Revenue Officers in 2012.
2. A Show Cause Notice was issued demanding service tax, interest, and imposing penalty, which the appellant contested citing financial difficulties as the reason for non-payment.
3. The Commissioner confirmed the service tax demand and penalty under Section 78(1) of the Finance Act, 1994.
4. The appellant appealed to the Tribunal solely contesting the penalty imposition, claiming no willful suppression or misstatement and citing full disclosure in ST-3 Returns.
5. The Tribunal upheld the penalty order, noting the appellant's awareness of the tax liability and deliberate non-payment due to financial difficulties, not ignorance or bona fide belief.
6. The appellant argued no penalty was warranted as there was no suppression, relying on a Tribunal decision in a similar case.
7. The Revenue supported the Tribunal's decision, stating no interference was required.
8. The appellant accepted the service tax liability but failed to deposit collected amounts due to financial constraints, noticed only during the 2012 visit.
9. The conditions for invoking extended limitation for service tax recovery under Section 73(1) are akin to those for penalty under Section 78, with the challenge focused on lack of willful suppression.
10. Section 78 allows penalty for willful misstatement, suppression, or contravention to evade service tax payment, and the appellant's failure to remit collected tax demonstrated contravention with intent to evade payment.
11. A relied-upon case was distinguished as non-payment was voluntary, not due to a surprise visit like in the present case, hence not assisting the appellant's argument against penalty imposition.
12. The Court found no substantial question of law in the proposed issue and dismissed the appeal, upholding the Tribunal's penalty order under Section 78 of the Finance Act, 1994.

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