2010 (1) TMI 339 - AT - Service Tax

Transport agency penalties overturned due to lack of intentional evasion, timely tax payment

The Tribunal set aside the penalties imposed on the transport agency appellant for non-payment of service tax, citing the absence of intentional evasion ... Penalty- Appellant rendered “Goods Transport Agency Service” (GTA) during the period 1-1-2005 to 31-3-2006 without following the statutory formalities including payment of service tax due. Held that- no finding that assessee proprietor expressing ignorance on liability. Penalties set aside. Issues:Non-payment of service tax by the appellant, imposition of penalties under various Sections of the Act, applicability of penalties in case of non-payment due to ignorance, interpretation of provisions under Section 73(3) of the Act, reliance on case laws for penalty imposition, relevance of intention to evade payment of duty, consideration of Circular F. No. 341/18/2004-TRU, setting aside penalties based on legal provisions and judicial authorities.Analysis:1. The case involved the appellant, a transport agency, providing services without following statutory formalities, leading to non-payment of service tax. The original authority refrained from imposing penalties, but the Commissioner imposed penalties under different Sections of the Act.2. The appellant argued that non-payment was due to ignorance and not intentional evasion. They highlighted that no finding of fraud or willful misstatement was made by the original authority. They contended that penalties should not be imposed without evidence of fraud or collusion as per Section 73(3) of the Act.3. The appellant relied on case laws like CCE, Jalandhar v. Darmania Enterprises and Majestic Mobikes Pvt. Ltd. where penalties were not imposed in similar circumstances, emphasizing the absence of intentional evasion.4. The JCDR argued that penalties were justified as the original authority did not exercise discretion under Section 80 of the Act. They contended that penalties were warranted based on the judgment in the Dharamendra Processors case.5. The Tribunal analyzed the case records and submissions. They noted that the appellant's ignorance was evident from statements and Circular F. No. 341/18/2004-TRU, which limited consequences to recovery of tax without penalties for non-deliberate defaults.6. The Tribunal found that the penalties imposed were not sustainable as there was no evidence of intentional evasion and the appellant had paid the tax due with interest before the show cause notice. They referenced Section 73(3) of the Act to support their decision.7. The Tribunal supported their decision by citing case laws like CCE, Jalandhar v. Darmania Enterprises and Majestic Mobikes Pvt. Ltd., where penalties were not imposed due to ignorance of law and absence of intentional evasion.8. Ultimately, the Tribunal set aside the penalties imposed on the appellant, stating that the penalties were contrary to legal provisions and judicial authorities, and allowed the appeal.This detailed analysis covers the issues of non-payment of service tax, imposition of penalties, interpretation of legal provisions, reliance on case laws, and the final decision of setting aside the penalties based on the appellant's ignorance and absence of intentional evasion.