2023 (11) TMI 562 - AT - Service Tax

Tribunal Overturns Penalty Due to Remote Operation and Pre-Notice Tax Payment; Grants Consequential Benefits.

The Tribunal allowed the appeal, setting aside the penalty imposed under Section 78, and granted the appellant consequential benefits in accordance with ... Non-imposition of penalty u/s 78 of FA - Non-payment of service tax - transportation services - cargo handling services - HELD THAT:- No case is made out of deliberate breach of the provisions of service tax and the Rules thereunder. Further, the appellant is engaged in the business of transportation and cargo handling services as a sole proprietor and located in the district of Chhindwara, which is a backward place of Madhya Pradesh. Further, admittedly, the appellant have deposited the tax prior to issue of show cause notice. The appellant is entitled to benefit of Section 80 of the Finance Act - Penalty u/s 78 set aside - appeal allowed. Issues involved: Whether penalty u/s 78 has been rightly imposed.Summary:The appellant, engaged in transportation and cargo handling services, was audited in December 2019, revealing non-payment of service tax on certain receipts. The appellant accepted the liability, paid the tax, and disputed another demand. A show cause notice was issued, leading to an Order-in-Original confirming the admitted demand, interest under Section 75, and imposing a penalty under Section 77 (2). The Revenue appealed for penalty imposition on the remaining demand, which was allowed by the Commissioner (Appeals). The appellant challenged the penalty under Section 78 before the Tribunal.The appellant argued that being from a remote area, they lacked proper professional advice for tax compliance. They contended that the interest calculation was not provided by the Revenue, and the penalty imposition should be set aside. The Revenue relied on the impugned order.After considering the contentions, the Tribunal found no deliberate breach of service tax provisions by the appellant, who operated in a backward area and had paid the tax before the show cause notice. The Tribunal held that the appellant was entitled to the benefit of Section 80 of the Finance Act, allowing the appeal and setting aside the penalty under Section 78. Consequential benefits were granted to the appellant in accordance with the law.The appeal was allowed, and the penalty under Section 78 was set aside, granting the appellant consequential benefits as per law.