2013 (3) TMI 421 - AT - Service Tax

Short payment of service tax - Deposited an amount without waiting for show cause notice - Proceedings were initiated by issue of show cause notice - Penalties under Sections 76, 77 & 78 - Section 73(1A) of Finance Act, 1994 - Held that - view has to be taken that appellant has deposited the entire amount of service tax interest and penalty to the extent of 25%. If there is any surplus is left, the amount is required to be refunded. Since this requires the calculation of service tax interest and penalty, the matter is remanded to the original adjudicating authority for the limited purpose of calculating the actual service tax liability

Issues:
1. Time-barred show cause notice.
2. Suppression of income leading to service tax demand.
3. Liability reduction claim.
4. Benefit under Section 73(1A) of Finance Act, 1994.
5. Imposition of penalties under Sections 76, 77 & 78.
6. Refund calculation for excess amount deposited.

Issue 1: Time-barred show cause notice
The Appellant argued that the show cause notice issued in 2007 was time-barred as the investigation was completed in 2005. However, the Tribunal found that the notice was valid due to the suppression of income by the Appellant, which was discovered only after officers visited the premises. Therefore, the ground of limitation was rejected.

Issue 2: Suppression of income leading to service tax demand
The Appellant failed to reflect the actual income received in their ST-3 returns, leading to a discrepancy in service tax payment. The Tribunal upheld the imposition of service tax demand, interest, and penalties due to the suppression of income by the Appellant.

Issue 3: Liability reduction claim
The Appellant claimed a reduction in service tax liability by Rs. 1,33,633 but could not provide supporting details due to being a non-operational company. The Tribunal noted the lack of evidence to support the claim and relied on the worksheet attached to the show cause notice to determine the correct service tax liability.

Issue 4: Benefit under Section 73(1A) of Finance Act, 1994
The Tribunal acknowledged that the Appellant had paid Rs. 10 lakhs towards service tax liability, interest, and other dues before the show cause notice was issued. As per Section 73(1A), if an assessee pays the mentioned amounts within thirty days of the notice, further proceedings need not be taken. The Tribunal ruled that the Appellant should have been given the benefit of this provision, and penalties under Sections 76 and 77 were set aside.

Issue 5: Imposition of penalties under Sections 76, 77 & 78
Penalties under Sections 76 and 77 were set aside due to the Appellant's early payment of dues. Regarding penalty under Section 78, the Tribunal directed the original adjudicating authority to calculate the actual service tax liability, interest, and penalty. The Appellant was entitled to a refund of any excess amount deposited after the calculations were made.

Issue 6: Refund calculation for excess amount deposited
The Tribunal remanded the matter to the original adjudicating authority for the calculation of the actual service tax liability, interest, and penalty. The Appellant would be eligible for a refund of any surplus amount deposited after the correct calculations were made according to the law.

This comprehensive analysis of the judgment highlights the key issues addressed by the Tribunal and the decisions taken regarding each issue.

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