Issue:- Whether benefit of Section 80 available if service tax not paid on account of ignorance?

PJ/Case Law/2013-14/2112

Case:- COMMISSIONER OF CENTRAL EXCISE, AURANGABAD Vs NAGAR TALUKA SSK LTD

Citation:- 2014-TIOL-392-CESTAT-MUM

Brief facts:- Revenue was in appeal against the impugned order wherein the Commissioner (Appeals) had set aside the penalty under Section 78 of the Finance Act, 1994 confirmed by the Adjudicating authority. The brief facts of the case were that the respondent availed Goods Transport Agency service during 01.01.2005 to 31.03.2009. As the respondent were required to pay service tax as service recipient of the said service but they did not pay the service tax and on pointing out by the department they showed their inability to deposit and assure the department they would pay along with interest which they paid. The Adjudicating Authority confirmed the demand along with interest and equivalent penalty under Section 78 on the ground that as there was intention of the respondent not to pay in time, penalty under Section 78 was imposable which was dropped by the Commissioner (Appeals). Aggrieved by the said order, revenue is in appeal.

Appellant’s contentions:- The ld. AR has contended that as the respondent had not paid service tax due therefore mandatory penalty under Section 78 was imposable on them as per the decision of the Hon'ble Apex Court. Therefore impugned order for dropping the penalty was to be set aside.

Respondent’s contentions:- On the other hand, the ld. Consultant appearing on behalf of the respondent submitted that whatever tax was required to be paid, they would have taken the credit immediately as service recipient. But by paying service tax late they had paid interest also. Further, it was submitted that as it was new service on which service tax was to be paid as service recipient, therefore they were not aware of the provisions, accordingly benefit of Section 80 has been rightly given to them.

Reasoning of judgment:- Hon’ble Judge agreed with the contention of the ld. counsel of the respondent that whatever service tax would have been paid would have been taken as credit, if paid in time. Therefore, the respondents were entitled for the benefit of Section 80 of the Finance Act, 1994. Therefore, he did not find any infirmity in the impugned order, the same was upheld.

In view of the above findings, the appeal filed by the revenue department was dismissed.

Decision:- Appeal dismissed.

Comment:- The analogy drawn from the case is that if the assessee does not pay service tax as he was ignorant of his service tax liability as a service recipient but later on, if the service tax was paid along with the interest, he shall be eligible for benefit of Section 80 . Accordingly, no penalty will be imposed on him as it cannot be said that the service tax was intentionally evaded or paid late because the amount of service tax paid by the assessee would be admissible to him as credit.

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PJ/Case Law/2013-14/2112

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