2011 (8) TMI 1260 - HC - Service Tax

Imposition of penalty - case of assessee is that the assessee has paid the service tax and interest even before the issue of SCN, and therefore in view of Section 73(3) of the FA, 1994 no penalty could be levied - Held that - it is clear before the issue of SCN the assessee acknowledges the leviability to pay the entire service tax due with interest and pays the same, then the authorities are precluded from issue of SCN - the order passed by the Tribunal is strictly in accordance with the aforesaid statutory provision and do not suffer from any legal infirmity which calls for interference - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Challenge to order passed by Tribunal on penalty imposition.
2. Dispute over penalty imposition under Sections 76, 77, and 78.
3. Interpretation of Section 73(3) of the Finance Act, 1994.

Analysis:
The High Court addressed the appeal filed by the revenue challenging the Tribunal's order, which held that the assessee had paid the service tax and interest before the show cause notice was issued, invoking Section 73(3) of the Finance Act, 1994 to prevent penalty imposition. The Court noted that the assessee did not contest the service tax liability, promptly paying the due amount upon discovering the default during an investigation. Subsequently, a show cause notice was issued, leading to penalty imposition by the Assessing Authority, a decision upheld by the Appellate Commissioner under Sections 77 and 78 but set aside under Section 76. The Tribunal, however, overturned all penalties, prompting the revenue's appeal.

The Court delved into the provisions of Section 73(3) of the Finance Act, 1994, emphasizing that if the person liable for service tax pays the due amount along with interest before a show cause notice is served, the authorities are barred from issuing such a notice. The judges found that the Tribunal's decision aligned with this statutory provision, devoid of any legal flaws warranting intervention. Consequently, the appeal was dismissed on its merits. Additionally, the Court rejected the application for condonation of delay in filing the appeal due to the dismissal of the appeal itself.