Penalty of Rs.2,46,271/- imposed on the assessees herein for delayed payment of service tax during the period February to October 2007, is challenged by the assessees, on the ground that they had reasonable cause for delay namely, (i) non-availability of funds on due dates; (ii) shortage of funds due to TDS and (iii) change of staff dealing with service tax .
2. I have heard both sides. I find that none of the reasons put forth by the assessees for delay in payment of service tax has reasonable cause so as to extend to them the shelter under Section 80 of the Finance Act, 1994. The Commissioner has given detailed finding in para 7.3 of the impugned order for rejecting the submission of the assessee that they had reasonable cause for the delay in paying the tax. Para 7.3 is reproduced herein below:-
“I, therefore, proceed to consider the request of the assessee to drop penal proposal in terms of Section 80. The reasons given for the delay in payment of Service tax are (i) Non-availability of funds on the due dates; (ii) Due to tax deduction at source (TDS) they would be left over with the shortage of funds by 6.33% every month, because of which the service tax could not be remitted within due dates; and (iii) Change of staff dealing with service tax. It is to be mentioned here that the service tax is required to be remitted to the Government Account only on realisation of the value of taxable service, that too only on the 5th of the following month in which the payments are received. But in the instant case though the value of taxable service and Service Tax have been realized from the clients, the assessee instead of remitting the service tax due, utilised the amount towards their day to day business purpose. Service Tax amount collected cannot be allowed to be used to tide over the financial crisis of the company. This IS neither permissible nor appropriate and needs to be discouraged. Utilisation of Service tax collected from the customers for running their business is nothing but blatant violation of law. The taxes should be remitted on the due dates. The shortage of funds due to deduction of TDS or change of staff are not justifiable ground for the simple reason that Service tax on the services rendered by them was not required to be paid by them overnight to catch their administration gasping. Hence, the reasons given by the assessee can not be considered as reasonable cause for delayed payment of service tax. In view of the above, I am unable to persuade myself to show any leniency in terms of Section 80 of the Act.”
3. As I am not satisfied with the reasons for delay in payment, I uphold the impugned order relating to imposition of penalty, and dismiss the appeal.