2015 (1) TMI 546 - AT - Service Tax

Imposition of penalty - suppression of facts - Validity of SCN - the appellant, without any protest, deposited the Service Tax with interest - Held that - No case of suppression is made out against the appellant. Further, as the appellant have declared the expenses of service incurred specifically in its books of account and final account and subjected to audit by Revenue twice before further enquiry made by the Revenue, no case of suppression or any intention to evade duty is attributable to the appellant. I further hold that as the appellant has paid the Service Tax along with interest, soon after being so pointed out by the Revenue and in less than 7 days on grant of registration under the specific head, no show-cause notice was required to be issued and adjudicated in terms of the clear mandate under Section 73(3) of the Finance Act, 1994. Thus, I hold that the show-cause notice is bad in terms of Section 73 of the Finance Act, 1994 - Decided in favour of assessee.

Summary

Issues:
1. Allegation of suppression of facts by the appellant regarding payment of Service Tax on Consulting Engineer's Services received from outside India.
2. Imposition of penalties under Sections 77(1)(a), 77(2), and 78 of the Finance Act, 1994 by the Revenue.
3. Appeal against the Order-in-Original confirming the demand of tax, interest, and penalties.
4. Interpretation of Section 73(3) of the Finance Act, 1994 regarding the requirement of show-cause notice in case of tax deposit with interest.

Analysis:

Issue 1: The appellant was alleged to have suppressed facts regarding the payment of Service Tax on Consulting Engineer's Services received from outside India. The Revenue issued a show-cause notice proposing to levy Service Tax for the period 2007-08 and 2008-09. The appellant argued that no suppression occurred as the expenses were disclosed in the books of account and were audited by the Revenue twice without any objections. The appellant also highlighted immediate tax payment upon being pointed out by the Revenue, within 7 days of registration under the specific category. The Tribunal found no intention to evade duty and held that no suppression was established against the appellant.

Issue 2: Penalties were imposed under Sections 77(1)(a), 77(2), and 78 of the Finance Act, 1994. The appellant contended that the show-cause notice was invalid under Section 73(3) as tax with interest was deposited promptly upon being pointed out by the Revenue. The Tribunal agreed with the appellant, setting aside the penalties imposed by the Order-in-Original.

Issue 3: The appeal was filed against the Order-in-Original confirming the demand of tax, interest, and penalties. The Commissioner (Appeals) upheld the Order-in-Original. However, the Tribunal allowed the appeal, considering the facts and circumstances of the case, and held the show-cause notice to be invalid under Section 73 of the Finance Act, 1994.

Issue 4: The interpretation of Section 73(3) of the Finance Act, 1994 was crucial in determining the validity of the show-cause notice. The Tribunal held that as the appellant had paid the Service Tax promptly upon registration under the specific category, no show-cause notice was required to be issued and adjudicated. The Tribunal allowed the appeal and set aside the impugned order, emphasizing compliance with the clear mandate of the law.

This judgment highlights the importance of timely tax payment, proper disclosure of expenses, and the legal provisions regarding the requirement of show-cause notices in tax matters.