By TIOL News Service

MUMBAI, JAN 10, 2013: THE appellants are registered provider of various taxable services.

During investigation it came out that the appellant had not paid Service Tax on the taxable services rendered during the period October 2002 to March 2007.

Accordingly, a SCN was issued and thereafter the adjudicating authority confirmed the demand of Rs.17,09,570/- with interest and also imposed penalties u/s(s) 76 and 77 of the FA, 1994 and also a penalty of Rs.2 crores was imposed u/s 78 of the FA, 1994.

Against this order passed by the CST, Mumbai, the appellant is before the CESTAT and does not challenge the demand of ST and interest but only penalty.

It is submitted that they had obtained registration as a service provider on 28.11.2003. Due to unavoidable circumstances, they could not pay ST on the due dates but they started paying the service tax suomotu from December, 2005 with interest. In the present case, investigation started on 16.06.2006 and the SCN was issued on 23.4.2008. Inasmuch as since they started paying ST along with interest suomotu there is no intention on the part of the appellant to evade service tax, submitted the appellant. They also informed that even though after August 2006 they had paid ST on due dates, the adjudicating authority had not considered the same; that their computer had crashed and the CA had neither recovered the ST nor paid the same. They seek invocation of section 80 of the FA, 1994 for waiver of penalty.

The Revenue representative justified the imposition of penalty by reiterating the findings of the adjudicating authority.

The Bench observed -

"9. As the appellant after getting the registration as provider of service tax appellant had not paid service tax on due dates prior to August 2006 and also not filed any statutory returns. This happened upto August 2006. As the appellant had not paid service tax nor filed any return, therefore we find no merit in the contention of the appellant that the appellants are not liable for penalties under Section 76 & 77 as imposed under the adjudicating order.

10. In respect of the penalty under Section 78 of the Finance Act, 1994 we find that appellant started paying service tax by dues after August 2006 and prior to this date there was default of Rs.1,26,95,968/-. Therefore, the appellants are liable to penalty of Rs.1,26,05,968/- under Section 78 of the Finance Act, 1994. The appellant had paid part amount of the penalty, the same be adjusted against the above amount of penalty. The impugned order is modified to this extent. Otherwise, the impugned order is otherwise confirmed."

The appeal was disposed of.

In passing: For some, enjoying the benefits of ST VCES only remains a pipe dream. If only had ST VCES been born seven years ago! By the way, a small corrigendum would suffice for the 90K deficit in s.78 penalty.

(See 2014-TIOL-53-CESTAT-MUM)