Whether penalty is imposable if short payment of service tax detected by department before filing ST-3?

PJ/CASE LAW/2015-16/2651

Case:-PECTJEM CLASSES VERSUS COMMISSIONER OF CENTRAL EXCISE, KANPUR

Citation:- 2014 (36) S.T.R. 448 (Tri. - Del.)

Brief Facts:-The appellant is a service provider under the category of commercial training and coaching centre. Their premises was visited by the officer on 14-10-2008 and various checks were done. From the record maintained by the appellant themselves, it was found that for the period May 2008 to September 2008, they have deposited less service tax to the tune of around Rs. 2,96,480/-. The appellants calculated the said service tax and agreed that there was short deposit during the said period and they immediately deposited the service tax along with interest of Rs. 1,296/-.

Appellants Contention:-The contention of the ld. C.A. appearing for the appellant is that the period involved is from May 2008 to September 2008 and the returns for the said period were yet to be filed by 25th October 2008. The visit of the officer on 14th October 2008, who conducted the investigations, resulted in finding of fact of short payment of service tax, which was on account of non-feeding of complete data in the software, though the other particulars were duly recorded in the statutory records. It is therefore contended that inasmuch as ST-3 returns were yet to be filed they would have reconciled the entire figures at the time of filing of returns and would have deposited the service tax accordingly. As such, the prayer is to set aside the imposition of penalty.

Respondents Contention:- Ld. DR reiterates the findings of the authorities below and submits that inasmuch as admittedly there was short payment, the penalties stand rightly imposed by the authorities.

Reasoning of Judgment:-On going through the impugned orders, tribunal find favour with the appellant’s submission that inasmuch as ST-3 Returns was yet to be filed by the appellant by 25th October 2008, the detection of short payment by the officers on 14th October 2008 is premature detection. The appellants have given a plausible explanation of short payment by submitting that inasmuch as entries were not made in the computers and the data was yet to be entered, there was no malafideon their part not to pay service tax. The said reconciliation of statement would have definitely been done by them and at the time of filing of ST-3 Returns. Further tribunal also find that the entire case of the Revenue is based upon the scrutiny of the statutory records maintained by the appellant in which case the appellant was not in a position to evade any service tax. Accordingly, tribunal is of the view that no penalty is imposable on the appellant. As a result, the demand and interest stands confirmed, as not contested and penalty imposed under various sections stands set aside. The appeal is disposed in above terms.

Decision:- Appeal disposed off.

Comment:- The crux of the case is that when before filing the service tax return i.e. ST-3 the officers make the detection of short payment of service tax and the assessee readily pays the same with interest and explains justifiable reason for the same, no penalty is imposable on the assessee. The reason given by the assessee that short payment was on account of non-feeding of complete data in the software appeared to be bonafide and therefore, no penalty was imposed on the assessee.

Prepared By-Neelam Jain

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PJ/CASE LAW/2015-16/2651

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