2014 (1) TMI 826 - AT - Service Tax

Delay in payment of service tax - Stevedoring and C&F Agents service - Storage and Warehousing - Payment made before issue of SCN - Penalty u/s 76 & 77 - Held that - in this case there is no allegation of any suppression or misrepresentation in the SCN and no penalty was proposed or imposed under section 78. In such a situation, any element which would bar the provisions under section 73 (3) cannot be considered to have existed - Revenue did not deal with a situation where tax amount and interest amounts have been paid before issue of SCN. In the present case, payment made should have been accepted for final closure of the dispute - Since the appellant has not filed ST-3 returns for other services either I do not find any reason to interfere with the penalty imposed under Section 77 - appeal partially allowed by setting aside penalty imposed under Section 76 but confirming the penalty imposed under Section 77 - Decided partially in favour of assessee.

Summary

Issues:
1. Applicability of penalty under sections 76 and 77 of the Finance Act, 1994 for non-payment of service tax on "Storage and Warehousing" services.
2. Invocation of section 73(3) of the Finance Act, 1994 in the absence of suppression or misstatement.
3. Imposition of penalty for delay in filing ST-3 returns under section 77 of the Finance Act, 1994.

Analysis:
1. The appeal pertains to the period 2002-04 where the appellant failed to pay service tax on "Storage and Warehousing" services after being registered for other taxable services. Upon audit discovery, the appellant paid the due tax and interest before a show cause notice was issued in 2004 demanding additional tax, interest, and penalties under sections 76 and 77 of the Finance Act, 1994. The Commissioner (Appeals) upheld the penalties, leading to the appeal before the Tribunal.

2. The appellant argued that since there was no allegation of suppression or misstatement in the show cause notice, penalty under section 78 should not apply. Citing precedents, the appellant contended that section 73(3) should apply, as the tax and interest were paid before the notice was issued. The Revenue argued against this, highlighting the appellant's failure to file returns for other services due to organizational restructuring, which the Tribunal found unconvincing. The Tribunal agreed with the appellant, setting aside the penalty under section 76.

3. Despite the appellant's non-filing of ST-3 returns for other services, the Tribunal upheld the penalty imposed under section 77 due to the lack of justification for the delay. The Tribunal's decision was based on the absence of suppression or misrepresentation in the show cause notice and the timely payment of tax and interest before the notice was served, aligning with the principles established in relevant case laws.

Conclusion:
The Tribunal partially allowed the appeal by setting aside the penalty under section 76 but confirming the penalty under section 77. The judgment emphasized the importance of timely tax payment and the absence of suppression or misstatement in determining the applicability of penalties under the Finance Act, 1994.