Tribunal rules in favor of Appellant in service tax case, citing no intent to evade payment

The Tribunal ruled in favor of the Appellant in a case concerning delayed payment of service tax. Despite the Appellant's bi-annual recording of journal entries, the Tribunal found no intention to evade tax payment as the Appellant maintained sufficient credit balance and filed returns accurately and on time. The Tribunal concluded that the irregular recording method did not constitute a delay in tax payment, ultimately allowing the appeal on 6th August 2020.

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Issues:
1. Delayed payment of service tax leading to interest and penalty charges.

Analysis:
The Appellant, engaged in providing taxable services, avails Cenvat credit for service tax paid on inputs and input services. The Department alleged that the Appellant delayed service tax payments by debiting its Books of Accounts bi-annually, contravening Rule 6 of the Service Tax Rules, 1994. A Show Cause Notice was issued, demanding interest and penalty. The Adjudicating Authority and Commissioner (Appeals) upheld the demand. The Tribunal heard both sides and examined the records.

The Tribunal observed that the Appellant discharged its service tax liability by debiting its Cenvat credit account monthly but recorded journal entries in its Books of Accounts bi-annually. Despite this, the Appellant maintained sufficient credit balance in its Cenvat account. The Tribunal noted that the Appellant's practice did not indicate an intention to evade tax payment. It emphasized that the Appellant's bi-annual entries, while a procedural irregularity, did not amount to a statutory violation. The Appellant consistently filed statutory returns on time, disclosing monthly liabilities accurately. Therefore, the Tribunal concluded that the Appellant's method of recording entries did not signify a delay in tax payment.

Ultimately, the Tribunal allowed the Appellant's appeal, ruling in favor of the Appellant. The judgment was pronounced on 6th August 2020 by Hon'ble Shri P. K. Choudhary, Member (Judicial) of the Appellate Tribunal CESTAT MUMBAI.

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