Case Law Details
Ace Test Labs And Consultancy Vs Commissioner Of Central Tax & Central Excise, Cochin (CESTAT Bangalore)
A plain reading of section 80 of Finance Act makes it clear that if the assessee proves that there was a reasonable cause for the failure in discharging service tax liability, then not withstanding anything contained in Section 76, 77 and 78 penalty shall not be imposable. The facts in the present case are that the appellant collected service tax during the period 01/10/2008 to 31/03/2013 from the service receivers but failed to deposit the service tax amount so collected with the Government Treasury. Advancing reasons for non-payment of service tax even though collected, it has been submitted by the appellant that during the relevant period, they were under severe financial crisis. In my view, this cannot be a reasonable cause for non-payment of service tax even though collected from the customers but not deposited with the Government. Also, the process of payment of collected service tax was commenced only after the Department initiated investigation and issued the demand notice to the appellant. The circumstances of financial difficulty in arranging the funds for payment of service tax collected and raising funds for the treatment of her daughter cannot be a ground to invoke Section 80 for setting aside the penalty imposed under Sections 77 and 78 of the Finance Act, 1994. The judgment cited by the learned advocate also lays down the principles that in the event, if there is reasonable cause for failure to make deposit, then only Section 80 would be attracted.
FULL TEXT OF THE CESTAT BANGALORE ORDER
This appeal has been filed against the Order-in-Appeal No.COC-EXCUS-000-APP-188-2021 dt. 25/02/2021 passed by the Commissioner(Appeals), Cochin.
2. Briefly stated the facts of the case are that the appellant during the relevant time engaged in providing taxable services under the category of “Technical Testing and Analysis Services”. On the basis of intelligence, investigation was initiated and show-cause notice was issued to the appellant on 22/04/2014 alleging evasion of service tax of Rs.12,76,526/- for the period 01/10/2008 to 31/03/2013 and recovery of the same and also proposing penalties under Sections 76, 77 and 78 of the Finance Act, 1994. On adjudication, the demand was confirmed with interest. The amount paid by the appellant during the course of adjudication along with interest was appropriated in the adjudication order and no penalty was imposed. The said order of the adjudicating authority was reviewed by the Department and appeal was filed before the Commissioner(Appeals) challenging non-imposition of penalty. The Commissioner(Appeals) modified the impugned order and imposed penalty of Rs.5000/- under Section 77 and penalty under Section 78 of the Finance Act, 1994. Hence the present appeal.
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