2010 (11) TMI 289 - AT - Service Tax

Penalty imposed u/s 76 - Appellant paid the service tax with interest and the department was informed of the same (during the ST-3 return), the provisions of Section 73(3) of Finance Act is applicable - The appellant s reliance on the decisions of this Tribunal in the case of M/s. U.B. Engineering Ltd. v. CCE, Rajkot vide , in cases like this no show cause notice need to be issued - Penalty under Section 76 cannot be sustained and accordingly appeal is allowed by way of setting aside the penalty imposed under Section 76 of Finance Act, 1994.

Summary

Issues:
Delay in payment of service tax, Penalty under Section 76 of Finance Act, 1994, Applicability of Section 73(3) of Finance Act, 1994, Judicial precedents regarding penalty imposition.

Analysis:
The appellant, engaged in providing construction services, faced a penalty under Section 76 of the Finance Act, 1994, due to delayed payment of service tax from April 2007 to September 2007, ranging from 20 to 47 days. Despite the delay, the appellant paid the tax with interest. The appellant contended that Section 73(3) of the Finance Act, 1994 should apply, which states that if the service tax is paid with interest before a notice is issued, no penalty should be imposed. The appellant also cited Tribunal decisions supporting this argument (Master Kleen v. CST, Bangalore). The Department, however, argued for penalty imposition based on the mentioned case law.

The Tribunal considered both arguments. It noted that the appellant made delayed payments but paid with interest, invoking the provisions of Section 73(3) of the Finance Act, 1994. This section allows the taxpayer to pay tax with interest before a notice is served, preventing penalty imposition. The Tribunal found merit in the appellant's reliance on judicial precedents, such as M/s. U.B. Engineering Ltd. v. CCE, Rajkot, which established that no show cause notice is required if the tax is paid with interest and the department is informed. Consequently, the Tribunal ruled in favor of the appellant, setting aside the penalty imposed under Section 76 of the Finance Act, 1994.

In conclusion, the Tribunal's decision, delivered on 12-11-2010, highlights the importance of complying with tax payment obligations and the legal provisions that allow relief in cases of delayed payment with interest. The judgment underscores the significance of timely payment and communication with tax authorities to avoid penalties, as established by relevant legal provisions and judicial precedents.