Waiver of penalty u/s. 80 may not be available on the sole ground of financial hardship, for delayed payment of taxes. Penalty is imposable even in cases where tax is paid before issuance of show cause notice

Bootleggers  Island   vs. CESTAT,  Chennai.2015 (39) STR  569 (Mad.) 

Waiver of penalty   u/s. 80 may not be available on   the   sole   ground     of   financial     hardship, for    delayed    payment     of   taxes.    Penalty    is imposable    even   in cases  

where   tax   is paid before issuance   of show cause notice.

FACTS:

Service tax was paid belatedly without interest. A show cause notice was issued for payment of service tax with interest and penalties. After various rounds of litigation, the Tribunal held that on the sole basis of financial hardship for delayed payment of service tax, the appellants cannot escape from penalties

HELD:

The Hon'ble High Court observed that the Tribunal had clearly held that it was not a case where the benefit of section 80 of the Finance Act, 1994 should be extended. In the absence of such a substantial plea and there being no bonafide justification for exemption, penalty was rightly imposed as mandated by the provisions of the Finance Act, 1994. Further, it was noted that the Madras High Court in the case of Dhandayuthapani Canteen vs. CESTAT 2015 (39) STR 386 (Mad.), had held that penalty is imposable even  in cases where tax is paid before issuance of show cause notice. With respect to bar on imposition of penalty u/s. 76 when penalty was levied u/s. 78 of the Finance Act, 1994, liberty was granted to the appellants to agitate the issue before the Commissioner.