Tribunal sets aside late fees for tax appeals, ruling in favor of appellant

The Tribunal ruled in favor of the appellant, setting aside the imposition of late fees for filing service tax appeals under Rule 12(6) of the Central Excise Rules, 2002. The Tribunal held that late fees for filing 'NIL' returns should not have been imposed as it absolved the appellant from being considered an 'assessee' for those periods. Additionally, the Tribunal found that the department's delay in acting on known delays precluded invoking the extended period of limitation, and the demand for late fees on the remaining returns was unsustainable due to the absence of willful acts or suppression.

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Issues:
Challenge to imposition of late fee for filing service tax appeals under Rule 12(6) of Central Excise Rules, 2002.

Analysis:
1. The appellant contested the imposition of late fee for filing service tax appeals covering the period from December 2014 to June 2017. The appellant argued that late fee for filing 'NIL' returns, where no tax liability existed, should not have been imposed. Additionally, the appellant objected to the penalty imposed and invoked relevant legal precedents to support their case.

2. The Tribunal observed that the appellant was engaged in manufacturing and supplying various products. The department noted delays in filing ER-1 returns from December 2014 to June 2017, with central excise duty paid through Cenvat credit. A show cause notice proposed recovery of late fee and Cenvat credit. However, the Adjudicating Authorities rejected disallowing Cenvat credit but confirmed the late fee demand under Rule 12(6) of Central Excise Rules, 2002.

3. The Tribunal analyzed Rule 12(6) of CER, 2002, focusing on the term 'assessee' and its applicability to those liable to pay duty/tax. It was established that 'NIL' returns absolved the appellant from being considered an 'assessee' for those periods, leading to the inapplicability of the late fee for those returns.

4. Regarding the remaining returns, the Tribunal noted that the show cause notice issued after three years exceeded the normal period of limitation. The department's failure to act on known delays since December 2014 precluded invoking the extended period of limitation, especially in the absence of willful mis-declaration or suppression.

5. The Tribunal emphasized that mere delay in filing does not constitute willful mis-declaration or suppression, as there was no evidence of intent to evade tax. The demand for late fee on the remaining returns was deemed unsustainable due to the absence of willful acts or suppression, aligning with legal precedents and settled law.

6. Further examination of Rule 12(6) revealed that the late fee could not exceed Rs. 20,000 for each return's delay period. Consequently, the excessive late fee demand of Rs. 5,42,700 was deemed unjustified. The Tribunal set aside the order, ruling it against established legal provisions and allowing the appeal based on the discussed reasons.

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