2023 (7) TMI 302 - AT - Service Tax

Tribunal overturns penalty for late tax payment, citing external factors and lack of intentional evasion

M/s. Luit Coal Products Pvt. Ltd. Versus Commissioner of Central Excise & Service Tax, Guwahati

M/s. Luit Coal Products Pvt. Ltd. Versus Commissioner of Central Excise & Service Tax, Guwahati - TMI Issues involved:The issues involved in the judgment are the imposition of penalty by the Commissioner in the Revision Order dated 31.03.2010 under section 84 of the Finance Act, 1994, due to the delay in payment of service tax by the Appellant for the period from April 2005 to September 2007.Details of the Judgment:Issue 1:The Appellant's delay in payment of service tax and the imposition of penalty by the Commissioner.The Appellants, engaged in the manufacture of various coke products, registered under the Finance Act, 1994 as a Goods Transport Agency Service, faced financial stringency leading to the non-deposit of service tax for the period from April 2005 to September 2007. A Show Cause Notice was issued by the Director General of Central Excise Intelligence, proposing to appropriate the amount voluntarily deposited by the Appellants towards their service tax liability. The Ld. Commissioner confirmed a demand and ordered the recovery of the differential amount, leading to the present appeal against the Revision Order.Issue 2:The Appellant's defense against the penalty imposition.The Appellant contended that the delay in payment of service tax was due to the non-release of Transport Subsidies from the Central Government, beyond their control, which severely impacted their financial position. They argued that they had reasonable grounds for the delay, citing Section 80 of the Finance Act, 1994, which provides for no penalty imposition if a reasonable cause for failure is proven. They referenced relevant case law to support their argument that penalty is not imposable in the absence of deliberate fraud or suppression of facts.Issue 3:The Tribunal's analysis and decision.After hearing both sides and reviewing the appeal records, the Tribunal observed that the Appellant had paid service tax before the issue of the Show Cause Notice and attributed the delay in payment to the non-receipt of transport subsidy. The Tribunal found that the Revisionary authority did not provide any valid reason to reject the Appellant's explanation for the delay. As there was no evidence of an intention to evade payment of service tax, the Tribunal held that penalty under Section 78 of the Finance Act, 1994 was not imposable. The Tribunal set aside the impugned Revision Order and allowed the appeal filed by the Appellant.Conclusion:The Tribunal, after considering the circumstances and the Appellant's defense, concluded that the penalty imposed by the Commissioner was not justified. They held that the Appellant's delay in payment of service tax was due to external factors beyond their control, and there was no evidence of intentional evasion. Therefore, the Tribunal set aside the Revision Order and allowed the appeal in favor of the Appellant.