2012 (4) TMI 406 - AT - Service Tax

Penalty u/s 76 on delayed payment of Service Tax Held that - No penalty can be imposed if the Service Tax liability and interest thereof stand deposited under the Section 73(3) - Show Cause Notice even for penalty cannot be issued if Service Tax liability and interest thereof has been met decided case Krishna Security & Detective Services Vs CST (2011 - TMI - 211577 - CESTAT, AHMEDABAD) against revenue.

Summary

Issues:
Waiver of pre-deposit of penalty under Section 76 for delayed Service Tax payment.

Analysis:

The Stay Petition was filed seeking waiver of pre-deposit of penalty imposed for contravening Section 76 by delaying Service Tax payment. The adjudicating authority and first appellate authority upheld the penalty. The Tribunal found that the appeal could be disposed of swiftly due to its narrow scope. The appellant had delayed Service Tax payment ranging from 34 to 370 days, despite regularly paying after registration. The Service Tax liability and interest were paid before the Show Cause Notice was issued for penalty imposition.

The appellant's counsel highlighted Section 73(3) of the Finance Act, 1994, specifically explanation (ii), arguing that no Show Cause Notice for penalty should have been issued if the Service Tax liability and interest were paid, citing relevant Tribunal judgments. The Revenue contended that Section 73(3) only prevents Show Cause Notices for recovery, not penalty issuance under Section 76. However, the Tribunal noted that Section 73(3) and its explanation (ii) indicate that if the Service Tax liability and interest are paid, no Show Cause Notice, even for penalty, should be issued. The Tribunal agreed with the appellant's counsel, citing the precedent set by the Tribunal in a similar case.

The Tribunal emphasized the clarity of Section 73(3) and the precedent's ruling that no penalty should be imposed if the Service Tax liability and interest are paid as per the section. Consequently, the Tribunal held in favor of the appellant, setting aside the impugned order and allowing the appeal. The judgment was pronounced in court, overturning the penalty imposition and upholding the appellant's case.