CCE Vs. AYYA COMMUNICATIONS

JUDGEMENT

(1.) HEARD both sides.

(2.) THE Department is in appeal against the order of the lower appellate authority waiving all the penalties imposed against the Respondents citing the provisions of Section 80 of the Finance Act, 1994. The learned SDR appearing for the Department states that this is not a case that can be brought under the purview of Section 80 as in this case the Respondents were liable to pay service tax with effect from 1.7.2003. They had obtained registration and they had paid an amount of Rs. 7,870/ -towards service tax during the period December 2005 to March 2006. The impugned period is from April 2006 to October 2006 for which they have neither paid any service tax nor filed any service tax returns as required under the law. Only after investigation by the Department it was ascertained from the statement of M/s. AIRCEL Ltd. dated 24.11.2006 that the Respondents have received an amount of Rs. 5,38,644.23 towards commission charges for the period from April 2006 to October 2006. Admittedly, the Respondents have only paid the service tax on 29.3.2007. He argues that the Respondents were not a new Assessee who was unaware of the legal provisions for whom the provisions of Section 80 can be extended. They are very well new to tax provisions and their tax liability and therefore the lower appellate authority has erred in waiving the penalty imposed.

(3.) AFTER hearing arguments from both sides, I find force in the argument by the learned SDR. The Respondents were not a new Assessee. They were under the service tax net from 1.7.2003 and they were duly registered as a service tax Assessee. No reasons have been advanced on behalf of the Respondents as to why they did not file the necessary service tax return for the impugned period as required under the law. No evidence has been produced that they did not receive the tax amounts from M/s. AIRCEL Ltd. In any case, if that were so, they could have opted cum -tax price assessment claiming the amount received to be inclusive of tax. But there are no such arguments advanced by the Respondents at any stage of the case. Hence, I am of the considered view that the provisions of Section 80 cannot be invoked in respect of an Assessee who is well aware of his legal obligations, who is already registered as a service tax Assessee and has paid tax and filed returns for the earlier periods but chose not to file tax returns and pay the tax for the subsequent period. As such, the penalties imposed under Section 76 and 77 of the Finance Act, 1994 for non -payment of the service tax and for non -filing of the returns by the original authority are restored by setting aside the impugned order passed by the lower appellate authority.