ST - Rule 7C of STR, 1994 - During period 04/2008 to 03/2011, for delayed submision of return, maximum penalty that could be imposed u/s 70 was Rs.2,000/- - Since one return has been filed in time, penalty is liable only on five returns of Rs.10,000/- - imposition of penalty of Rs.1,01,500/- not sustainable: CESTAT
By TIOL News Service
MUMBAI, JULY 21, 2015: IN the matter of the Stay application filed by the service tax assessee against the order passed by Commissioner(A), Mumbai-IV, the CESTAT had passed a Stay order on 28.07.2014 [2014-TIOL-1764-CESTAT-MUM] and we had reported it thus -
ST - Rule 7C of STR, 1994 - Appellant delayed filing of ST returns for April 2008 to March 2011 and filed the same on 07/09/2011 - in the meantime, department issued notice on 25/08/2011 directing appellant to file returns and pay penalty for non-filing of returns u/s 77 of FA, 1994 - Supdt. vide order dated 09/09/2012 imposed penalty of Rs.10,000/- u/s 77 of FA, 1994 - another SCN issued on 13/02/2012 proposing to demand a sum of Rs.1,01,500/- being the late fee u/r 7C of STR, 1994 r/w s.77 of FA, 1994 - vide order dated 04/06/2012 the penalty was confirmed and order was upheld in appeal - appeal to CESTAT.
Held: Rule 7C makes it abundantly clear that the maximum penalty that can be imposed is the one prescribed u/s 70 of FA, 1994 and during the relevant period April 2008 to March 2011 the maximum penalty was Rs.2000/- per return and, therefore, in respect of six returns the penalty that can be imposed is Rs.12,000/- and not more - therefore, prima facie , the late fee imposed of Rs.1,01,500/- is not sustainable in law - since appellant has already paid Rs.10,000/- u/s 77, same is sufficient for hearing the appeal - Pre-deposit waived and stay granted: CESTAT [para 7.1]
The appeal was heard recently.
After narrating the facts, the appellant submitted that under Rule 7C, there is a cap placed on the late fee payable and the relevant provision reads as follows:
"provided that the total amount payable in terms of this rule, for delayed submission of return, shall not exceed the amount specified in section 70 of the Act"
Further, section 70, at the relevant time, put a cap of penalty at Rs.2,000/- per return and therefore, the maximum penalty that could have been imposed on the appellant was only Rs.12,000/- for six (half-yearly) returns and whereas the late fee charged under the impugned order is Rs.1,01,500/-; that the appellant has already paid Rs.10,000/- under Section 77 and one return has been filed in time.
The AR stuck to his guns and reiterated that the maximum cap under Rule 7C for delayed submission of return is Rs.20,000/- per return which came into force w.e.f. 08/04/2011 and, therefore, imposition of penalty of Rs.1,01,500/- is sustainable in law.
The Bench observed -
"7.1. Rule 7C read with first proviso makes it abundantly clear that the maximum penalty that can be imposed under the said Rule is the one prescribed under Section 70. During the impugned period i.e. April 2008 to March 2011 the maximum penalty that could be imposed under Section 70 was Rs.2,000/-. Therefore, in respect of six returns, the maximum penalty that could have been imposed was only Rs.12,000/- and not more than that amount. Since one return has been filed in time, penalty is liable only on five returns and thus the total liability to penalty is only Rs.10,000/-. Inasmuch as the appellant has paid the said amount, there is no further liability to penalty."
In fine, the penalty of Rs.10,000/- imposed u/s 77 was upheld and the late fee imposed of Rs.1,01,500/- u/r 7C of the STR, 1994 was set aside.
Penalty mania - Computation par excellence…
(See 2015-TIOL-1484-CESTAT-MUM)
