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Penalties
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Posted on 22-07-2006 23:51
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Super Administrator
Posts: 129
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Where the assessee company could not pay service tax on time since the person handling service tax affairs was suffering from advanced stage of tuberculosis and the tax was paid as soon as he resumed duty, the Tribunal waived the penalty u/s. 76 sought to be imposed on them in view of the following :
(i) no show cause notice was required to be issued since the tax was paid before the issuance of show cause notice [section 73(2A) now section 73(3)]; and
(ii) the conduct of the assessee in paying the tax as soon as the relevant person resumed duty showed the bona fides of the assessee which merited condonation of penalty u/s. 80
[Bright Motors (P.) Ltd. vs. CCE (2006) 2 STR 502 (Tri. – Del.)]. |
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Posted on 22-07-2006 23:54
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Super Administrator
Posts: 129
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Where the delay in payment of service tax relates to the period when the matter was pending before the High Court and the service tax is paid and returns were submitted before the issue of show cause notice penalty u/ss 76 & 77 were set aside. [CCE vs. Agarwal Bimal & Co. 2006 (2) STR 130 (Tri-Kol.)]
Where the delay in payment of service tax and filling of returns was a result of confusion with regards to changing jurisdictions of services tax administration during the period the Tribunal took a lenient and sympathetic view of the whole matter and reduced the penalty. [S. R. Enterprises vs. CCE, 2006 (2) STR 135 (Tri-Mumbai)]
Benefit of immunity from imposition of penalty under the Extraordinary Tax Payer Friendly Scheme as per Circular F. No. 137/39/2004-CX.4, dated 20-09-2004, is available to assessees who had not only failed to register themselves due to ignorance or for any other reason and who came forward and registered and paid the past liability within the period prescribed under this circular, but also to those assessees who had already taken registration or but paid service tax under this scheme. [CCE vs. R. K. Electronic Cable Network (2006) 2 STR 153 (Tri-Del) contra: CCE, vs. Mankodi Enterprises, 2006 (2) STR 150(Tri-Del.)]
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Posted on 23-07-2006 00:03
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Super Administrator
Posts: 129
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The assessee was liable to pay service tax under sound recording services w.e.f. 16.7.2001. There was a delay in payment for the period July, 2001 to March, 2002 which was subsequently paid. The department levied penalty @ Rs. 100/- per day u/s. 76. The Commissioner (Appeals) reduced the penalty considering the small structure and limited resources of the assessee. On appeal by the department, the Tribunal, considering the provisions of section 80 which provides for condonation of penalty on reasonable cause ground, upheld the order of the Commissioner (Appeals). [CCE vs. Sanchar Bharti P. Ltd. (2006) 2 STR 7 (Tri-Del.)]. |
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Posted on 23-07-2006 00:07
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Super Administrator
Posts: 129
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Section 80 which provides for condonation of penalty on 'reasonable cause' ground has an overriding effect over sections 76, 77, 78 and 79 imposing various penalties. Thus, reduction of penalty u/s. 76 from Rs. 100/- per day to Rs. 200/- per week by the Commissioner (Appeals) after giving sufficient reasons was held good in law [CCE vs. Lark Chemicals Pvt. Ltd. (2006) 1 STR 267 (Tri- Mum.)].
A financial difficulty is not a "reasonable cause" for delay in payment of service u/s. 80. Further, payment of service tax prior to the issuance of the show cause notice cannot be a reason for non-imposition of penalty as in the case of excise since the penal provisions under service tax are couched in a language different from those relating to Central Excise [INMA International Security Academy Pvt. Ltd. vs. CCE (2006) 1 STR 289 (Tri-Che.)] |
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Posted on 23-07-2006 00:19
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Super Administrator
Posts: 129
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Illness of staff is not a reasonable cause u/s. 80 for condonation of penalty u/s. 77 for delay in filing the returns since the appellants who were well aware of the provisions of law could have made alternative arrangements. [Fairdeal Enterprise Pvt. Ltd. vs. CCE (2006) 1 STR 27 (Tri- Kol.)].
Where the appellants were defrauded by an employee who withdrew sums for depositing the service tax but actually utilized it unauthorisedly the Tribunal, on finding that the appellants had filed a FIR and paid the tax suo motu subsequently with interest, condoned the penalty for delay in payment of taxes and filing of returns u/s. 80 [Royal Security Force vs. CCE (2006) 1 STR 29 (Tri- Mum.)].
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Posted on 23-07-2006 00:23
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Super Administrator
Posts: 129
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Where the service tax and interest is deposited prior to the issuance of the show cause notice and before adjudication penalty u/ss. 76 and 77 is not imposable. CCE, Kolkata-I vs. Eastern Security Concern (2005) 71 RLT 476 (CESTAT-Kol.) |
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Posted on 23-07-2006 00:23
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Super Administrator
Posts: 129
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Commission paid to dealers by a manufacturer for procurement and processing of orders was held liable for service tax under the category of clearing and forwarding services. [Prabhat Zarda Factory vs. CCE, Patna (2002) 145 ELT 222 followed]. In this case it was held under the circumstances that interest and penalties were not leviable.
NRC Ltd. vs. CCE, Thane-I (2005) 71 RLT 569 (CESTAT-Mum.)
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Posted on 23-07-2006 00:27
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Super Administrator
Posts: 129
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Where the service tax and interest is deposited prior to the issuance of the show cause notice and before adjudication penalty u/s. 76 and 77 is not imposable.
CCE, Kolkata vs. Camera World (2005) 71 RLT 292 (Tri-Kol.) |
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Posted on 23-07-2006 00:28
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Super Administrator
Posts: 129
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With regard to penalties imposable u/s. 76 for delay in payment of service tax and u/s. 77 for delay in filing of returns the Tribunal held as follows :
(i) Penalties u/ss. 76 and 77 cannot be condoned on the ground that the tax was paid along with interest before the issuance of the show cause notice;
(ii) "Reasonable cause" envisaged u/s. 80 is a cause or reason which is beyond the assessee's control. A financial difficulty is not a "reasonable cause" for delay in payment of service tax and penalty u/s. 76 cannot be condoned on this ground.
On the basis of the above the Tribunal sustained the penalty u/s. 76. As regards penalty u/s. 77 it observed that during the major part of the period in dispute the penalty imposable u/s. 77 was Rs. 2,000/- and therefore reduced the penalty u/s. 77 from Rs. 3,000/- to Rs. 2,000/-.
Jupiter Sea & Air Services vs. CCE, Chennai - I (2005) 188 ELT 285 (Tri. - Chennai) |
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Posted on 23-07-2006 00:30
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Super Administrator
Posts: 129
Joined: 01.05.06
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With regard to penalties imposable u/s. 76 for delay in payment of service tax due to financial / cash crisis arising on account of huge bad debts and u/s. 77 for delay in filing of returns the Tribunal held as follows :
(i) There cannot be any grievance against minimum penalty imposed u/s. 76;
(ii) The quantum of penalty u/s. 77 being statutorily fixed, there is no discretion left to the quasi-judicial authorities to determine a lesser amount of penalty;
(iii) A financial difficulty is not a "reasonable cause" u/s. 80 for delay in payment of service tax. Further, the appellants were solvent enough to write-off bad debts while continuing to do their business. Apparently their financial difficulty was only in the matter of paying their dues to the exchequer.
Thus, the Tribunal rejected the appellants' plea and penalties u/ss. 76 and 77 were sustained.
Trans (India) Shipping Pvt. Ltd. vs. CCE, Chennai - I (2005) 188 ELT 445 (Tri. - Chennai) |
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Posted on 23-07-2006 00:31
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Super Administrator
Posts: 129
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Where due to the cancer treatment of the director's close relative service tax could not be deposited in time and which was thereafter paid along with interest the Tribunal condoned the penalty u/s. 76
CCE, Delhi - I vs. J.S. Architech Pvt. Ltd. (2005) 188 ELT 455 (Tri. - Del.) |
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Posted on 23-07-2006 00:37
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Super Administrator
Posts: 129
Joined: 01.05.06
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The Supreme Court has upheld the decision of the Tribunal in L. H. Sugar Factories Ltd. vs. CCE, Meerut - II (2004) 165 E.L.T. 161 (Tri. -Del.) ; (2004) 61 RLT 142 (CESTAT - Del.). In the said decision considering the language of section 73 prior to, and as amended by, the Finance Act, 2003 the Tribunal held as follows:
(i) prior to Finance Act, 2003, no show cause notice could be issued to the appellants, who were receivers of services of Clearing & Forwarding Agents and Goods Transport Operators and who were as users of services liable to pay service tax during the relevant periods since a notice under section 73 could be issued only to the assessees who are required to file return u/s 70 and there was no date for filing the returns for service receivers [based on para 12 of the judgment of the Supreme Court in Laghu Udyog Bharti vs. Union of India (1998) 112 ELT 365 (SC)]; and
(ii) after Finance Act, 2003, such service receivers cannot be issued a show cause notice u/s 73 since a notice under section 73 could be issued only to the assessees who are required to file return u/s 70 and the appellants were liable to file their returns u/s 71A.
CCE, Meerut - II vs. L. H. Sugar Factory (2005) 187 ELT 5 (SC) |
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Posted on 23-07-2006 00:57
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Super Administrator
Posts: 129
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Following the decision in Ashok Rastogi v. Commr. of Central Excise, Kanpur 1998(104) ELT 480 (Tribunal) the Tribunal held that the delay in filing nil return is a procedure lapse which is condonable and hence penalty not warranted.
B & A Multiwall Packaging Ltd. v. Commissioner of Central Excise, BBSR-I (2005) 185 ELT 374 (Tri.- Kolkata) |
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Posted on 23-07-2006 00:59
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Super Administrator
Posts: 129
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Where the demand for short payment of service tax was made based on the entries made in the return (which were erroneous) and no other evidence indicated suppression of receipt the Tribunal held that imposition of penalty was not justified.
N. C. Maheshwari & Co. vs. CCE, Delhi (2005) 184 ELT 321 (Tri - Delhi)
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Posted on 23-07-2006 01:04
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Super Administrator
Posts: 129
Joined: 01.05.06
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Where there was a delay in payment of taxes due to loss of shares in transit and loss of entire data due to crash in computer hard disc and the tax was paid before the adjudication order was passed the Tribunal reduce the penalty from the maximum limit (the amount of tax) to Rs. 10,000/-.
Jhunjarji Investment Pvt. Ltd. vs. CCE, Kolkata (2005) 68 RLT 797 (CESTAT-Kol.) |
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Posted on 23-07-2006 01:05
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Super Administrator
Posts: 129
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No penalty is imposable on failure to file Nil Returns [Ashok Rastogi vs. CCE (1998) 104 ELT 480 (T) followed].
B & A Multiwall Packaging Ltd. vs. CCE, BBSR -1, 2005 -TIOL - 404 - CESTAT - Kol. |
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Posted on 23-07-2006 01:12
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Super Administrator
Posts: 129
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CCE, Rajkot vs. Air Express Courier Services (2005) [182 ELT 409 (Tri-Mum.)]
Following R.B. Bahutule v. CCE, Mumbai [(2004) 166 E.L.T. 233] the Tribunal in this case held that delay in filing returns being only a procedural lapse, penalty is condonable. |
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Posted on 23-07-2006 01:17
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Super Administrator
Posts: 129
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INMA International Security Academy Pvt. Ltd. vs. CCE, Chennai (2005) 180 ELT 107 (Tri-Chennai)
On facts, the Tribunal held as follows:
The provisions of section 75 relating to interest is mandatory;
The provisions of section 76 provided minimum and maximum limits for imposition of penalty and the assessing authority had a discretion to impose a penalty between these limits. Considering the fact that the entire amount of tax was paid before adjudication the Tribunal reduced the penalty from Rs. 175443/- to Rs. 10.000/-;
The provisions of section 77 does not provide for flexible considerations for imposing a penalty. |
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Posted on 23-07-2006 01:19
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Super Administrator
Posts: 129
Joined: 01.05.06
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Binani Metals Ltd. vs. Commissioner of Central Excise, Mumbai-I (2005) 180 ELT 450 (Tri. - Mumbai)
On facts Tribunal reduced the penalty u/s. 76 for delay in payment of tax from Rs. 26,8007- to Rs. 5,000 considering the fact that the delay was as a result of advise given by a tax consultant and cannot be considered as mala fide on the part of the appellant.
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Posted on 23-07-2006 01:21
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Super Administrator
Posts: 129
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Commissioner of Central Excise, Madurai vs. Pandian Hotels Ltd. (2005) 180 ELT 458 (Tri. - Chennai)
Financial hardship on account of falling into the clutches of usury people referred to as "Mafia" without any evidence on record to show that the assessees have prosecuted their defrauders as per law cannot be a reasonable cause u/s. 80 for condoning the penalty u/s. 76. Accordingly the quantum of penalty cannot be reduced below the minimum prescribed limit under section 76 in absence of a reasonable cause under section 80. |
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