2010 (10) TMI 145 - AT - Service Tax

Penalty delay in payment of service tax - person chargeable with tax, pays the amount on the basis of own assessment, before service of notice, with interest, Central Excise officers shall not service any notice on him - persons who voluntarily deposited the tax, no proceedings are required to be initiated Held that - no dispute that the appellants had discharged service tax liability with interest before issue of show cause notice - appeals are allowed.

Summary

Issues:
Delay in payment of service tax leading to imposition of penalty under Section 76 of Finance Act, 1994.

Analysis:
In this case, the appellants had delayed the payment of service tax for multiple quarters, leading to the imposition of penalties under Section 76 of the Finance Act, 1994. The first appellant delayed payment for three quarters, the second for four quarters, and the third for two quarters. Despite paying the service tax with interest and filing returns on time, show cause notices were issued proposing penalties under Section 76, which were subsequently confirmed.

The appellants argued that the issue was settled by various Tribunal decisions, citing cases such as M/s. UB Engineering v. CCE, M/s. Amrish Enterprises v. CCE, M/s. Shanthi Casting Works v. CCE, and M/s. Electro World v. CCE. The Revenue, however, contended that repeated delays in payment did not warrant a lenient view, especially considering previous delays in filing returns by one of the appellants.

Upon considering the arguments, the Tribunal referred to Section 73(3) of the Finance Act, 1994, which states that if the person liable for tax pays the amount based on self-assessment before receiving a notice, with interest, no further action is required. Additionally, a circular by the CBEC clarified that no proceedings are needed for those who voluntarily pay the tax. Since the appellants had cleared their tax liabilities with interest before the show cause notices were issued, and in light of the relevant Tribunal decisions, the appeals were allowed.

This judgment highlights the importance of timely payment of service tax and the consequences of delayed payments. It also underscores the significance of self-assessment and voluntary tax payment in avoiding penalties under the Finance Act, 1994. The Tribunal's decision was based on statutory provisions and established precedents, emphasizing compliance with tax regulations to prevent legal consequences.