Promptness in making payment could be considered to be reasonable cause to waive pen-alty u/s. 80 of the finance act, 1994.

36 STR 78 (Tri-bang) Access Equipments vs. comm. Of cus. & c. ex. Hyderabad – IV  [2014]

Facts:

The appellant contended that he was under a bonafide belief that services tax was supposed to be paid by the services tax was supposed to be paid the services provider in case of GTA  services. Further, on being pointed out by the department, services tax liability under reverse charge mechanism was paid immediately.

The revenue argued that since the liability as not contested, extended period of limitation was rightly invoked and the pertinent reason for failure to pay services 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 services tax was paid by services provider. Further, services 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.