2013 (5) TMI 56 - AT - Service Tax

Penalty - u/s 73 - Appellant had not paid the differential service tax during the material period in question but has paid the same on being pointed out by the audit party and claimed that they have paid the entire tax before the issuance of notice. Held that - The appellant having discharged the entire service tax liability before the issuance of notice has correctly sought the invocation of the provisions of Section 73(3) of the Finance Act, 1994 which talks about non issuance of SCN for imposition of penalties. I find that the appellant was correct in bringing to my notice that the judgment of the Hon ble High Court of Gujarat in the case of Rita Dyeing & Printing Mills (P) Ltd. 2012 (10) TMI 501 will squarely cover the issue in his favour. In view of the foregoing, the entire demand is set aside as already paid twice and the penalties imposed under Section 73(3) of the Finance Act, 1994 are also set aside.

Summary

Issues:
1. Discharge of correct service tax liability.
2. Imposition of penalties.
3. Invocation of Section 73(3) of the Finance Act, 1994.

Analysis:
Issue 1: The appellant was providing maintenance and repair services with discharged tax liability. However, discrepancies were found during an audit, leading to a show cause notice for unpaid tax, interest, and penalties. The appellant argued that the tax amount was deposited before the notice was issued. The lower authorities did not accept the appellant's claim, resulting in penalties being imposed.

Issue 2: The appellant contended that the tax amount was paid twice, which was not acknowledged by the authorities. The chartered accountant representing the appellant cited relevant case laws and judgments to support the argument that no penalty should be imposed if the tax liability was discharged before the show cause notice was issued.

Issue 3: The Additional Commissioner argued that the appellant failed to pay the correct tax amount as pointed out by the Revenue authorities. However, a clarification revealed that the disputed amount was indeed paid twice. The Tribunal analyzed the facts and determined that the appellant had discharged the entire tax liability before the issuance of the show cause notice, invoking Section 73(3) of the Finance Act, 1994.

Conclusion: The Tribunal found in favor of the appellant, setting aside the demand for the disputed amount that was paid twice and nullifying the penalties imposed under Section 73(3) of the Finance Act, 1994. The appellant's appeal was allowed, and the impugned order was overturned, providing relief based on the correct application of the law and relevant precedents.