2015 (3) TMI 1006 - AT - Service Tax

Penalty u/s 78 - Whole disputed liability paid before issuance of SCN - Held that - It is an admitted fact that the entire service tax liability attributable to the taxable services provided by the appellant has been paid along with interest before issuance of show-cause notice. Sub-section (3) of Section 73 mandates that on payment of the amount of service tax on the basis of own ascertainment by the service provider or on the basis of tax payable as ascertained by the Central Excise officer, no show-cause notice shall be served on the service provider in respect of the amounts so paid. We find that the authorities below have accepted the fact regarding payment of tax along with interest by the appellant and over and above such payment nothing further is payable, representing the service tax or interest thereon. We find that no iota of evidence has been brought on record to prove that the appellant had the intention to evade payment of service tax. There-fore, we are of the considered view that the adjudication proceedings initiated for imposition of penalty alone is not in conformity with the provisions of Section 73(3) of the Finance Act, 1994. Further, in absence of any specific findings in the impugned order as regards the involvement of the appellant in fraudulent activities in defrauding the Government revenue, we are of the considered view that a good ground is made out for waiving the penalty amount under Section 80 of the Finance Act, 1994. - Decided in favour of assessee.

Summary

Issues:
Service tax liability payment before show-cause notice issuance; Imposition of penalty under Section 78 of the Finance Act, 1994; Applicability of Section 73(3) of the Act; Benefit of Section 80 for non-imposition of penalty.

Analysis:

The appellant filed an appeal against the impugned order passed by the Commissioner (Appeals), Mangalore, regarding service tax liability, interest, and penalty. The appellant had paid the entire service tax liability along with interest before the show-cause notice was issued. The appellant contested the penalty imposed under Section 78 of the Finance Act, 1994, citing Section 73(3) of the Act, which states that if the tax liability is paid before show-cause proceedings, no notice shall be served. The appellant argued that there was no suppression of facts to justify the penalty and requested the benefit of Section 80 for non-imposition of penalty.

Upon hearing both parties and reviewing the records, it was confirmed that the appellant had indeed paid the service tax liability and interest before the show-cause notice. Section 73(3) prohibits the issuance of a show-cause notice if the tax has been paid based on self-ascertainment or by the Central Excise officer. As there was no evidence of intention to evade payment and no findings of fraudulent activities in the impugned order, the adjudication proceedings for imposing the penalty were found to be inconsistent with Section 73(3) of the Finance Act, 1994. Consequently, the penalty was waived under Section 80 of the Act due to the lack of evidence supporting its imposition.

Therefore, the appeal was allowed, and the impugned order was set aside, leading to the disposal of the stay petition as well. The decision was pronounced in open court, bringing an end to the legal proceedings in favor of the appellant.