2012 (6) TMI 22 - AT - Service Tax

Delayed payment of service tax - jurisdictional Assistant Commissioner issued a show-cause notice alleging non-payment of service tax Held that - appellant-assessee had discharged the service tax liability and interest thereon much before the issue of the show-cause notice and had also filed the service tax return for the relevant period before the issuance of the notice. They also informed that they had also deposited late fee of Rs. 2,000/- for the delayed filing of the return provisions of sub-section (3) of Section 73 is clearly attracted in the facts of the case and issuance of a show-cause notice for demand of service tax and imposition of penalties was not at all warranted. imposition of penalties under Sections 76, 77 and 78 in this case was not at all warranted and therefore set aside. The appeal is allowed

Summary

Issues:
Non-payment of service tax, imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994, appeal against the Order-in-Appeal, applicability of Section 73 of the Finance Act, 1994.

Analysis:
The appellant, a small-scale contractor, provided Maintenance and Repair Services to a company, collecting service tax but delaying remittance to the Revenue. The jurisdictional Assistant Commissioner issued a show-cause notice for non-payment of service tax and proposed penalties under Sections 76, 77, and 78 of the Finance Act, 1994. The appellant did not respond, leading to an ex parte order confirming the tax amount, interest, and imposing penalties. The appellant appealed, arguing they paid the tax and interest before the notice, thus no penalties should apply under Section 73 of the Act. The Commissioner (Appeals) upheld the penalties, prompting the current appeal.

The appellant contended that as per Section 73(3) of the Finance Act, 1994, no notice or penalties should apply if the tax is paid before any notice is served. The appellant had paid the tax, interest, and late fee before the notice, showing compliance. The Tribunal noted that the appellant's actions were in line with Section 73(3), as they paid the tax liability before the notice, filed the return, and paid the late fee as instructed. The Tribunal found no wilful misstatement or suppression, thus the show-cause notice and penalties were unwarranted.

The Tribunal held that the penalties imposed under Sections 76, 77, and 78 were not justified given the appellant's compliance with Section 73(3) of the Act. As the appellant challenged only the penalties, they were set aside. The appeal was allowed, providing consequential relief if necessary. The judgment emphasizes adherence to legal provisions and timely tax payment to avoid unwarranted penalties, ensuring fair treatment for taxpayers under the law.