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October 2014

2014 (35) STR 586 (Tri. – Mumbai) Commissioner of C. Ex., Aurangabad vs. Nagar Taluka SSK Ltd.

By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
Reading Time 2 mins
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If the assessee paid service tax belatedly after being informed by department, whether penalties may be waived on the grounds of lack of knowledge regarding service tax liability? Held, Yes.

Facts:
The respondents availed of Goods Transport Agency services on which service tax was to be discharged under reverse charge mechanism which was not known to them. On being pointed out, they demonstrated their inability to pay tax but assured to pay tax along with interest in future which was subsequently paid. The Adjudicating Authority, however, confirmed demand along with penalties under the Finance Act, 1994 on the grounds that intentionally payment was not made. Penalty levied was dropped by the Commissioner (Appeals) against which the department filed the appeal contending that tax was not paid on time and hence, mandatory penalty was imposable as per Hon’ble Apex Court’s decision. The assessee pleaded lack of knowledge and also requested for benefit of section 80. Respondent’s case was that they paid tax along with interest without availing input tax credit and therefore, requested to set aside penalty levied and allowing input tax credit.

Held:
Agreeing with the contentions of the respondents, benefit of section 80 was granted and penalties were waived.

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