ORDER
J.H. Joglekar, Member (T)
1. The Service Tax was introduced w.e.f. 1-7-1994. Section 69 of the Finance Act, 1994 requires registration of persons responsible for collecting service tax. The appellant, being a share broker, was so required to be registered. The appellant was registered as a stock broker on 17-12-1992. As per U.P. Stock Exchange Association Ltd. certificate dated 17-4-1997, till that date he had not conducted any business. The appellant got himself registered under Section 69 on 5-1-1995. He, thereafter, submitted quarterly returns, as required under Section 70 of the said Act. All these returns showed “nil tax collected”. Five show cause notices were issued on 14-2-1996 alleging that the returns for the quarters ending September, 94 to September, 95 were filed late and that penalty was imposable for such delay. The Assistant Commissioner used his powers under Section 80 of the Act and imposed a total penalty of Rs. 20,000.00 as against the permissible imposable quantum of penalty of Rs. 36,000.00. Before the Commissioner (Appeals), the plea was made that the returns for the last three quarters were sent in time by registered post and that the return for the quarter ending December, 1994 was delayed only by 12 days. It was claimed that the delay was on the part of the Post Office. Before the Commissioner, it was also argued that the assessee was not aware of the procedure. The Commissioner upheld the order of the Assistant Commissioner, resulting in the present appeal being filed before CEGAT.
2. Shri J.S. Agarwal, ld. Advocate arguing for the appellant stated that during the entire period, no business was conducted by the appellant. That being a new scheme, there was a general lack of awareness of the provisions of the rules. Majority of the returns were submitted in time and the delay in receipt of was on account of the post office. Ld. Advocate submitted that it was the responsibility of the department to remind the assessee to file a return in case it was not done. He, further, argued that penalty under Section 76 could not be imposed where no tax was collected. His final submissions is that Section 80 permits not to levy any penalty. Therefore, the act of the Assistant Commissioner in imposing penalty was wrong. Shri Agarwal, relied upon the following judgments of the Tribunal where penalties imposed upon the service lax assessee were set aside on the observation that the tax, being new, there was general lack of awareness. It was also held that in all these cases the assessee had not collected any tax.
1. Ashok Rastogi v. C.C.E., Kanpur reported in 1997 (22) RLT 513.
2. Shri Sajjan Kumar Kariwala v. C.C.E., Allahabad reported in 1997 (20) RLT 885.
Shri Tilak, ld. DR for the department claimed that on these very grounds, the Assistant Commissioner has already imposed a lower quantum of penalty. He stated that the defence that tax was new and that the assessee did not have knowledge would be relied for the first quarter, but was not available for the successive quarters.
3. I have carefully considered the submissions made before me and have seen the cited judgments. The judgment in the case of Ashok Rastogi, takes notes of the Sajjan Kumar judgment. In these cases, relief was granted. I find that both the cases relate to the period immediately subsequent to the introduction of the service tax. In the case of Sajjan Kumar Kariwala the failure was for filing the return for quarter ending September, 94. In the case of Ashok Rastogi, the returns involved were quarter ending September, 94 and quarter ending December, 94. In the present case, the failure is on the part of the assessee to file returns in time for four successive quarters. Ld. Advocate at the time of personal hearing reiterated the plea made in the appeal memorandum that the returns for three quarters were filed in time but were received late on account of postal delay only. The delay ranges between 12 days to 30 days for the last 3 quarters. For the 2nd quarter, it is of 108 days. For the first quarter, the assessee has advantage of the cited judgments. But thereafter, there is no explanation as to why there was so much of delay. The plea that the delay was on account of post office is not substantiated. Both the assessee and the officer to whom the return was to be filed, were situated in the same town. The delay between 12 to 30 days in the absence of proper substantiation cannot be explained merely on the failure of the post office. The assessee has first to show that the delay was not on his part but on the part of the postal authorities.
4. The show cause notice seeks to impose penalty both under Section 76 and Section 77. Section 76 may not be applicable where the assessee had not collected any tax. Section 77 can be applied by itself for the consistent failure of the assessee, to submit a return in time, the penalty is leviable on him. However, in view of the fact the assessee had not conducted any business, there is cause for reduction of penalty. I, therefore, reduce the quantum of penalty from Rs. 20,000.00 to Rs. 5,000.00. Subject to this, the appeal is otherwise dismissed.