VISTA INFOTECH Vs. THE COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) THIS Appeal is directed against the Order -in -Original No. 41/2008 dated 18.9.2008, passed by the Commissioner of Service Tax, Bangalore.

(2.) THE issue involved in this case being that the appellant is allegedly charging, collecting but not depositing the service tax with the department, which was noticed by the authorities on verification of the records which were called for from the appellant. The period involved in this case is from January 2007 to June 2007. The appellant's representative in a statement had admitted that there is a delay in discharging the service tax; due to severe financial crunch; due to non -release of payment from one of their major clients and accepted to pay the dues along with interest and accordingly paid the same on 5.7.2007 and 19.7.2007. The lower authorities issued a show cause notice dated 31.1.2008 for confirmation of demand of service tax paid by the appellant, interest at appropriate rate and appropriation of amounts of service tax and interest and also imposition of penalty under Sections 76, 77 and 78 of the Finance Act, 1994. The appellant contested the show cause notice before the adjudicating authority and submitted that there was no intention to evade payment of service tax but there was sufficient cause for non -deposit of the tax liability. The appellant claimed remedies under Section 73(3) of the Act. The adjudicating authority after considering the submissions made, confirmed the demand of service tax, also demand of interest and appropriated the amounts towards the tax and interest. The adjudicating authority also imposed penalty of Rs. 200/ - per day under Section 76; penalty of Rs. 1000/ - under Section 77 and equivalent penalty under Section 78 of the Finance Act, 1994. Aggrieved by such an order, the appellant is in appeal before us.

(3.) THE learned DR on the other hand submits that the appellant could have sought for loan or overdraft facility from the financial institution to overcome his financial hardship and could have deposited the service tax. He submits that this view has been taken by the tribunal in the case of Jaipur Sea & Air Services reported in : 2006 (3) STR 704 (Tri. - Chennai) in similar circumstances. It is the submission that non -payment of service tax and non -filing of ST -3 returns attract the penal provisions of Sections 76, 77 & 78 of the Act. It is the submission that the subsequent payment of tax was only after the investigation undertaken by the department and it would prove that there is an existence of intention to evade payment of service tax. Hence the imposition of penalty under Sections 76, 77 & 78 of the Finance Act, 1994 is correct and proper.