2014 (1) TMI 611 - AT - Service Tax

Penalty u/s 76 - Delay in payment of service tax on repeated occassion - Held that - According to proviso to sub-section 73(3) of Finance Act 1994 if an assessee pays service tax with interest on the basis of ascertainment of a Central Excise Officer or on his own ascertainment and inform the department of such payment no show-cause notice shall be issued unless the short payment has occurred because of suppression fraud willful mis-statement etc. for which separate provisions are available. In this case even though there have been several occasions on which there was delay in payment of Service Tax in all such cases Service Tax was paid with interest and there is no dispute that payment was made before the issue of show-cause notice. Section 73(3) of Finance Act does not differentiate between a habitual defaulter and a non-habitual defaulter. Therefore the issue is squarely covered by the statutory provisions and hence the impugned order cannot be faulted - Decided against Revenue.

Summary

Issues:
Appeal against penalty imposed under Section 76 of Finance Act, 1994; Interpretation of proviso to Section 73(3) of Finance Act, 1994; Differentiation between habitual and non-habitual defaulters.

Analysis:
The appeal before the Appellate Tribunal CESTAT Bangalore involved challenging the penalty imposed under Section 76 of the Finance Act, 1994. The impugned order set aside the penalty based on the proviso to Section 73(3) of the Finance Act, 1994, and a Circular issued by the Board. The Revenue contended that the appellant, by delaying payment of service tax on multiple occasions from 2003 to 2007, should not have the penalty set aside, as the appellant was considered a habitual defaulter. The Revenue cited previous Tribunal decisions to support their argument, emphasizing that penalties under Section 76 were upheld in similar cases.

The consultant for the respondents argued that the proviso to Section 73(3) does not distinguish between habitual and non-habitual defaulters. The key requirement was the payment of service tax with interest before the issuance of a show-cause notice. Referring to a High Court decision, the consultant highlighted that no different approach was specified for habitual defaulters in the Circular issued by the Board. The Tribunal noted that the statutory provisions under Section 73(3) did not differentiate between habitual and non-habitual defaulters. The Tribunal also observed that the appellant in the cited cases had not relied on the proviso to seek waiver of pre-deposit under Section 76, making those decisions irrelevant to the current case. The Tribunal focused on the applicability of the proviso to Section 73(3) as the primary issue at hand.

After considering the submissions from both sides, the Tribunal concluded that the impugned order could not be faulted as the issue was covered by the statutory provisions. The Tribunal found no merit in the Revenue's appeal and rejected it. The judgment highlighted the importance of adhering to the statutory provisions regarding the payment of service tax and the implications for penalty imposition under Section 76 of the Finance Act, 1994.