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December 2014

30. [2014] 36 STR 78 (Tri.-Bang) Aacess Equipments vs. Commr. of Cus. & C. Ex., Hyderabad – IV

By Puloma Dalal, Jayesh Gogri, Mandar Telang Chartered Accountants
Reading Time 1 mins
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Promptness in making payment could be considered to be reasonable cause to waive penalty u/s. 80 of the Finance Act, 1994.

Facts:
The Appellant contended that he was under a bonafide belief that service tax was supposed to be paid by the service provider in case of GTA services. Further, on being pointed out by the department, Service tax liability under reverse charge mechanism was paid immediately. The revenue argued that since the liability was not contested, extended period of limitation was rightly invoked and the pertinent reason for failure to pay service tax was ignorance, which was not a reasonable cause to waive off penalties.

Held:
The Appellant was a proprietorship concern and not supported by any professional person. Layman would generally believe that service tax has to be paid by service provider. Further, service tax was paid immediately with interest on detection. Accordingly, having regard to the promptness and peculiar circumstances of the case, penalty u/s. 78 of the Finance Act, 1994 was set aside by invoking provisions of section 80 of the Finance Act, 1994.

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