2011 (8) TMI 871 - AT - Service Tax

Waiver of pre-deposit - show cause notice dated 20-10-2009 alleging that during the period April, 2008 to March, 2009, they have paid service tax to the extent of the cenvat credit available with them and remaining amount of service tax, which was liable to be paid in cash, was delayed from 1 to 6 months from the respective due dates - the various decisions of the Tribunal as also on the Letter No. F. No. 1371/67/2006-CX.4, dated 3-10-2007 which is to the effect that where service tax is paid suo motu by the assessee, the show cause notice is not called for. It stands recorded in the impugned order of the Commissioner that the service tax and interest stand paid by the appellant before issue of the show cause notice - Decided in favor of the assessee

Summary

Issues:
1. Pre-deposit of penalty under Section 76 of the Finance Act, 1992.
2. Liability for penalty for delayed payment of service tax.

Issue 1: Pre-deposit of penalty under Section 76 of the Finance Act, 1992

The judgment starts by mentioning the dispensation of the condition of pre-deposit of penalty imposed by the lower authorities at the rate of 200/- per day in accordance with Section 76 of the Finance Act, 1992. The Tribunal proceeds to deliberate on the appeal itself, emphasizing that the matter at hand is of limited scope.

Issue 2: Liability for penalty for delayed payment of service tax

The appellant, a service tax registrant for the removal of over-burden from coal mines, was alleged to have delayed the payment of service tax for the period from April 2008 to March 2009. The show cause notice contended that the appellant had paid the service tax only to the extent of the available cenvat credit, with the remaining amount delayed by 1 to 6 months from the due dates. However, the appellants had actually deposited the tax along with interest before the show cause notice was served. They argued that since they had paid the tax and interest before the notice, the issuance of the notice was unnecessary. The Commissioner acknowledged the pre-payment but insisted on imposing a penalty due to the delayed payment.

The Tribunal referred to Section 73(3) of the Finance Act, 1994, which states that if the service tax and interest are paid by the assessee before the issuance of a show cause notice, and there is no fraud or wilful intention, further proceedings should not be initiated. In this case, the entire service tax and interest were paid before the notice, and no malice was attributed to the appellant. Citing a precedent, the Tribunal concluded that the penalty imposition was unwarranted. Consequently, the Tribunal set aside the penalty and allowed the appeal, providing consequential relief to the appellant.

This comprehensive analysis of the judgment highlights the issues of pre-deposit of penalty and liability for delayed payment of service tax, elucidating the Tribunal's decision and legal reasoning in each aspect of the case.