1. The appellants are providers of taxable services. They committed default of payment of service tax for various quarters of the years 1998 - 2001. The tax for this period was paid only on 12.3.2002. The party also did not file ST - 3 Returns within the prescribed time for various half-years of 1999 - 2001. Ultimately they filed returns for these half-years only on 13.3.2002. Subsequently the department issued a show-cause notice to them proposing penalties under Sections 76 & 77 of the Finance Act 1994 for the above defaults. This proposal was contested. The adjudicating authority imposed penalties of Rs. 3,45,293/- and Rs. 3,000/- on the assessee under Sections 76 & 77 respectively. The first appellate authority upheld the decision taken by the lower authority with regard to the penal liabilities of the assessee, but reduced the quantum of penalty under Section 76 to Rs. One lakh. The assessee is still aggrieved. Hence the present appeal.
2. Ld. Counsel for the appellants submits that as the tax was paid with interest prior to issuance of show-cause notice any penalty was not imposable on them under Section 76 or under Section 77 of the Finance Act. It is submitted that the delay of payment of tax and that of filing of returns were satisfactorily explained by the assessee, but such explanation was ignored. According to ld. Counsel the benefit of Section 80 of the Finance Act, 1994 was available to the assessee in the facts of this case. He has relied on the Tribunal's decision in Mukund K. Roongta V. CCE - 1999 (107) ELT 38, wherein a penalty imposed on the assessee was set aside in view of an earlier order of the Tribunal. Ld. Counsel also relied on the decision of the Tribunal in Rajinder Kumar Somani V. CCE - 1999 (113) ELT 111. Ld. DR reiterates the findings of the lower authorities and relies on the following decisions; (i) Tata Consultancy Services V. Union of India - 2001 (130) ELT 726 (Kar.)Pee Aar Steels (P) Ltd. V. CCE 3. After considering the submissions, I find that the question to be decided upon in this case is whether penalties under Sections 76 & 77 are imposable on a service tax defaulter where he has paid service tax with interest prior to issuance of the relevant show-cause notice.
Delay of payment of service tax is a cause of action for penalty under Section 76. This provision of law does not take into account circumstances such as those pointed out today by ld. Counsel. Section 77 is invocable against a service tax assessee who makes delay in filing of ST - 3 Returns. Again, this provision is regardless of the above circumstances. However, under Section 80, the assessee can claim exoneration from these penalties if he satisfies the quasi-judicial authority that he was prevented by sufficient cause from paying service tax and filing returns in time. In the instant case, it is the appellant's contention that their explanation of the delay was not considered. What appears from the Order-in-Original is that their explanation was considered. The only explanation offered by the party is that they had financial difficulties and hence happened to pay tax belatedly. As regards non-filing of returns, they can have no such explanation. A plea of financial hardships cannot, by itself, be a satisfactory cause of delayed payment of service tax. Otherwise, every assessee can escape penal liability under Section 76 of the Finance Act, 1994. It needs to be mentioned that financial difficulty is not a circumstance beyond one's control. It is something, for which remedies are available in the commercial world. What Section 80 envisages is a cause or reason [for delayed payment of service tax] which is beyond the assessee's control and could be brought home to a quasi-judicial authority to its satisfaction. In the present case, no such circumstance is obtaining and, therefore, Section 80 would not come to the rescue of the assessee.
4. The question now is what should be the quanta of penalties under Sections 76 & 77. Ld. Commissioner (Appeals) has reduced the penalty under Section 76 to Rs. One lakh, in an apparent exercise of discretion. The Revenue is not aggrieved by this exercise of discretion, nor is it the appellant's case that the lower appellate authority did not exercise its discretion on sound principles. This Tribunal does not want a sit in judgment over such exercise of discretion. In the result, the penalty of Rs. One lakh will stand affirmed.
5. As regards Section 77, it is noticed that, for a major part of the period of dispute, this provision prescribed a penalty of Rs. 2,000/- only. For a small initial part of the above period, the provision prescribed a penalty of Rs. 3,000/- and for a small terminal part of the said period, it prescribed a penalty of Rs. 1,000/-. At any given point of time, the quantum of penalty was fixed under Section 77. I am of the view that, in determining the quantum of penalty, regard should be had to the fact that the penalty imposable under this provision for a major part of the period of dispute was Rs. 2,000/- only.
Consequently I would limit Section 77 penalty to Rs. 2,000/-. Except in this respect, the impugned order is sustained.