Non-payment of collected service tax can not be bona fide belief

Non-payment of collected service tax and showing NIL tax liability in returns, cannot be regarded as done under a bona fide belief; hence, penalties under sections 76 to 78 cannot be waived by resort to section 80

HIGH COURT OF GUJARAT

Indsur Global Ltd.

v.

Additional Commissioner of Service Tax, Vadodara

AKIL KURESHI AND VIPUL M. PANCHOLI, JJ.

TAX APPEAL NO. 1245 OF 2014
CIVIL APPLICATION (OJ) NO. 643 OF 2014

DECEMBER  9, 2014 

Section 80, read with sections 73, 76, 77 and 78, of the Finance Act, 1994 - Penalty - Not to be imposed in certain cases - Assessee had collected service tax from service recipient but did not deposit same with Government and showed NIL service tax liability in periodical returns - Assessee paid service tax only after issuance of summons by department - department levied penalties under sections 76, 77 and 78 - Assessee claimed that it was a case of bona fide error and penalties must be waived under section 80 - HELD : Primary duty is on assessee to establish 'reasonable cause' for failure, which is a question of fact - It was found by lower authorities and Tribunal that assessee failed to offer any such reasonable cause - Non-payment of collected service tax and showing NIL tax liability in returns, cannot be regarded as done under a bona fide belief - Penalties were upheld [Paras 4 and 5] [In favour of revenue]