STCL LTD Vs. CCE

JUDGEMENT

(1.) AFTER hearing both sides for some time, it was found that both the stay application and appeal can be disposed of since the dispute is only in respect of penalty imposed on the appellant and the appellant is not contesting the tax amount involved and the interest payable thereon. During the period August 2006 to March 2009, the appellant had provided auctioneers service on which they were required to pay service tax as per provisions of Finance Act, 1994. They had collected service tax from the service recipient but they did not deposit the amounts so collected with the service tax Department. Therefore, a show -cause notice was issued and adjudicated. After adjudication and first appeal, there is an amount of Rs. 33,889/ - confirmed against the appellant along with interest under Section 75. Further a penalty of Rs. 33,889/ - is imposed under Section 78 and a penalty under Section 77(1)(a) of the Finance Act, 1994 has been imposed at the rate of Rs. 200/ - per day from the first day after the due date of commencement of provision of Auctioneers Service to till the date of registration. There is also a penalty of Rs. 5,000/ - imposed under Section 77(2) of the Finance Act, 1994. It is noticed that the appellant was given an option to pay reduced penalty as per the first proviso to Section 78 of the Finance Act, 1994 which was not exercised by the appellant.

(2.) THE appellant is contesting the order on the ground that they were not aware of the service tax laws and that they were under the impression that service tax was paid by their Head office and that is the reason for the delay in payment. But when the irregularity was pointed out, they paid an amount of Rs. 33,804/ - and she requests for setting aside the penalty.

(3.) I have considered the submissions of both sides. I agree with the learned AR that the argument of the appellant that they were not aware of service tax laws and they were under the impression that their Head Office has paid the service tax cannot be accepted. The appellant knew enough about service tax laws to collect it from service recipients and claims ignorance about rest of the laws. They collected the tax and expected some other office to remit it to government. No proof of any correspondence with their Head Quarters is produced. The excuses set up obviously imply suppression of information from department. Therefore, I do not see any reason to set aside the penalty imposed under Section 78 of the Finance Act. Since the option of 25% of the penalty was already given by the adjudicating authority I do not find any reason to interfere with that part of the order. However, in the matter of penalty under Section 77(1)(a), I feel that the penalty imposed is excessive and hence I reduce this penalty to Rs. 5,000/ - (Rupees five thousand only). Further, after imposing penalty under Section 77(1)(a), I do not find any reason to impose penalty under Section 77(2) on the appellant. Therefore, penalty of Rs. 5,000/ - imposed under Section 77(2) is set aside. Thus the appeal filed by the appellant is allowed partially. The stay application also stands disposed of.