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Service Tax Non-payment due to illness of Mother of Partner: CESTAT drops Penalty

M/s. ARCHI-TECHNICS Vs. Commissioner of Central Excise and Service Tax (CESTAT Bangalore)

I find that there was delay in payment of service tax which was on account of the reasonable cause as the mother of one of the partner was suffering from heart problem. Further, I find that this Tribunal in the case of Raj Kumar vs. CCE cited supra has accepted the fact that if the service tax is not paid in time due to the illness of the father of the assessee, which is a reasonable cause and by invoking Section 80 of the Finance Act, penalty imposed was set aside. Similarly, other decisions relied upon by the appellant cited supra have invoked Section 80 for dropping the penalty if the reasons given are reasonable. In view of the Division Bench decision of the Tribunal in the case of Raj Kumar Ora cited supra, I am of the considered view that appellants are not liable to pay penalty and I invoke the provisions of Section 80 of the Finance Act to waive the penalty.

FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT

The present appeal has been remanded by the Hon’ble High Court vide its order dated 8.8.2018. The High Court has set aside the order dated 12.1.2015 passed by the Tribunal whereby the Tribunal has dismissed the appeal of the assessee.

2. Briefly the facts of the present case are that the appellant is registered as a service provider under the category of ‘Architect Services’ and were filing ST-3 returns and paying service tax. However, for the period 1.4.2008 to 30.9.2008, they filed their ST-3 returns on 27.10.2008 and shown the value of service so provided by them as Rs.17,55,000/- and service tax liability to the extent of Rs.2,10,600/- were reflected in the said ST-3 return. Further, the appellant did not deposit the service tax as mentioned in the ST-3 return. Service tax along with interest was ultimately deposited by them after one year three months. Proceedings were initiated against the appellant for imposition of penalty and the lower authority confirmed the penalty in terms of Section 76 of the Finance Act, 1994 to the extent of Rs.1,11,000/- which was upheld by the appellate authority.

3. Heard both sides and perused the records.

4. Learned counsel for the appellant submitted that there was a delay in payment of service tax on account of the fact that the mother of one of the partner was suffering from heart problems and as such, on account of the expenses being spent by them towards the treatment of their mother, they could not pay the service tax in time. The learned counsel further submitted that in view of the reasonable cause shown by the appellant, the penalty should be waived by invoking Section 80 of the Finance Act, 1994. In support of his submission, he relied upon the following decisions:

  •  Raj Kumar Ora vs. CCE, Jaipur: 2009 (14) STR 836 (Tri.-Del.)
  •  Aqua Master Clean vs. CST, Ahmd.: 2016 (42) STR 68 (Tri.-Ahmd.)
  • Ralson Carbon Black Ltd. vs. CCE, Chandigarh: 2014 (34) STR227 (Tri.-Del.)
  • Ramanasekar Steels Ltd. vs. CCE, Chennai: 2008 (9) STR 132 (Tri.-Chennai) affirmed by Hon’ble High Court of Madras in Commissioner vs. Ramanasekar Steels Ltd.: 2014 (33) STR
    J220 (Mad.)

5. On the other hand, the learned AR defended the impugned order.

6. After considering the submissions of both the parties and perusal of the material on record, I find that there was delay in payment of service tax which was on account of the reasonable cause as the mother of one of the partner was suffering from heart problem. Further, I find that this Tribunal in the case of Raj Kumar vs. CCE cited supra has accepted the fact that if the service tax is not paid in time due to the illness of the father of the assessee, which is a reasonable cause and by invoking Section 80 of the Finance Act, penalty imposed was set aside. Similarly, other decisions relied upon by the appellant cited supra have invoked Section 80 for dropping the penalty if the reasons given are reasonable. In view of the Division Bench decision of the Tribunal in the case of Raj Kumar Ora cited supra, I am of the considered view that appellants are not liable to pay penalty and I invoke the provisions of Section 80 of the Finance Act to waive the penalty. Consequently, I set aside the penalty by allowing the appeal of the appellant.

(Operative portion of the Order was pronounced in Open Court on 18/09/2018)

Categories: Service Tax
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