2015 (7) TMI 141 - AT - Service Tax

Penalty u/s 78 - Technical know-how - Held that - Appellant has discharged the service tax liability and the interest thereof before the issuance of the show-cause notice. In our view, this should have been considered as enough compliance by the appellant and provisions of Section 73(3) of the Finance Act, 1994 should have been invoked and show-cause notice need not have been issued. - appellant had given justifiable reason for non-discharge of the service tax liability on the services rendered by them. We find that the demand on the appellant is based upon the figures worked out from balance sheet which indicates that the appellant had not suppressed any information from any authorities. In our view, this is a fit case for invoking the provisions of Section 80 of the Finance Act, 1994. - Impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
Discharge of service tax liability on technical know-how services rendered from October 2007 to June 2008 and imposition of penalties under various sections.

Analysis:
The appeal addressed the issue of service tax liability on technical know-how services under Section 65(105) of the Finance Act, 1994, for the period from October 2007 to June 2008. The appellant did not contest the service tax liability and interest but sought to set aside the penalties imposed by the Adjudicating Authority and upheld by the first appellate authority. The appellant had informed the department about discharging the entire service tax liability along with interest before the issuance of a show-cause notice. Despite this, a show-cause notice was issued, leading to the imposition of penalties under Section 78 of the Finance Act, 1994.

The Tribunal noted that the appellant had complied with the service tax liability and interest before the show-cause notice was issued. It was observed that the provisions of Section 73(3) of the Finance Act, 1994, should have been invoked, and the show-cause notice need not have been issued. The appellant provided justifiable reasons for the non-discharge of service tax liability on the services rendered. The demand on the appellant was based on figures from the balance sheet, indicating no suppression of information. Consequently, the Tribunal considered invoking the provisions of Section 80 of the Finance Act, 1994, in this case.

By invoking Section 80 of the Finance Act, 1994, the Tribunal set aside the order upholding the penalty imposed on the appellant under Section 78 of the Act. The appeal was disposed of accordingly, providing relief to the appellant regarding the penalties imposed. The judgment highlighted the importance of compliance with tax liabilities and the appropriate application of penalty provisions under the relevant legislation.

This detailed analysis of the judgment provides insights into the legal interpretation and application of provisions related to service tax liability and penalties in the context of technical know-how services, emphasizing the significance of timely compliance and justifiable reasons in tax matters.