2007 (3) TMI 128 - AT - Service Tax

Penalty (service tax) - Revenue contended that appellant is liable for penalty on the ground that late deposit of service tax but before issue of SCN - Held that revenue contention was correct and allowed

Summary

Issues:
Appeal against setting aside penalty under Section 76 of the Finance Act, 1994 for paying Service Tax before show-cause notice issuance.

Analysis:
The Department appealed against the lower appellate authority's decision to set aside the penalty imposed under Section 76 of the Finance Act, 1994, for paying Service Tax before the issuance of a show-cause notice. The Revenue argued that the provisions of Section 76 are distinct from Customs and Excise Law, and thus, the cited decisions by the lower appellate authority are not applicable.

The Department's representative highlighted that the Hon'ble High Court of Punjab & Haryana overturned a Tribunal decision in a specific case, emphasizing the imposition of penalties under Section 76. Additionally, a Tribunal decision in the case of Splendour Security Services Pvt. Ltd. upheld the penalty imposition under the same section.

On the other side, the respondents' Advocate referred to a Tribunal decision in the case of Mass Marketing & Advertising Services Pvt. Ltd., which set aside a penalty when tax payment preceded the show-cause notice. Another case, Commr. of Central Excise, Mumbai v. Top Detective & Security Services Pvt. Ltd., also supported this stance.

After reviewing submissions and cited decisions, the Tribunal noted that the respondents, as Customs House Agents, should be aware of Service Tax payment obligations. The adjudicating authority's order listed numerous instances of delayed payments, some exceeding one to four years. Referring to a recent Tribunal decision in C.C.Ex., Meerut I v. Parmarth Steel & Alloys (P) Ltd., the Tribunal concluded that penalties are applicable when duty is paid after detecting non-compliance, even if before the show-cause notice. Following this reasoning, the Tribunal set aside the lower appellate authority's decision and reinstated the penalty under Section 76.

Ultimately, the Tribunal allowed the Revenue's appeal, emphasizing the imposition of the penalty under Section 76 of the Finance Act, 1994. The judgment was pronounced on 29-3-2007.