2001 (6) TMI 3 - AT - Service Tax

Manpower agencies penalized for service tax non-compliance despite expecting repeal.

The Appellate Tribunal CEGAT, Mumbai upheld penalties and interest on two manpower recruitment agencies for failure to pay service tax, despite their ... Service tax on manpower recruitment - duty to pay tax imposed by Parliament - penalty for failure to pay tax - reasonable cause for imposition of penalty - good faith defence based on expectation of repealService tax on manpower recruitment - penalty for failure to pay tax - reasonable cause for imposition of penalty - good faith defence based on expectation of repeal - duty to pay tax imposed by Parliament - Whether penalty for non-payment of service tax could be reduced on the ground of reasonable cause or bona fide expectation that the tax would be repealed. - HELD THAT: - The Tribunal held that taxpayers have a duty to pay taxes lawfully imposed by Parliament from the date liability commences, even while they protest or seek repeal. A bona fide expectation that the tax might be withdrawn (as occurred in a different instance) does not constitute a reasonable cause for refusing to pay. The appellants' deliberate refusal to pay in the hope that governmental action or representations would secure repeal was not an act of good faith but a wilful omission. No moral-objection basis was asserted. Accordingly, there existed no justification for reducing the penalty imposed for non-payment of the service tax. [Paras 3]Penalty upheld and appeals dismissed.Final Conclusion: The Tribunal affirmed the penalty for non-payment of service tax by manpower recruiting agencies, rejecting the contention that an expectation of repeal or representations to the government constituted reasonable cause; appeals dismissed. The Appellate Tribunal CEGAT, Mumbai confirmed penalties and interest on two manpower recruitment agencies for not paying service tax. The agencies argued they expected the tax to be repealed, but the Tribunal upheld the penalties, stating taxpayers must pay taxes imposed by Parliament. The Tribunal dismissed the appeals, emphasizing the importance of complying with the law.