2015 (11) TMI 525 - AT - Service Tax

Penalty u/s 76 & 78 - Short payment of service tax - Suppression of facts - Held that - Appellant have not declared value of the service tax and service tax payable correctly in the ST3 returns but data was available in the books of account and on scrutiny by the department officers. They have retrieved data from books of account only. Since, on pointed out by the department officer, appellant has paid entire service tax alongwith interest, penalty under Section 78 should not have been imposed. - Section 73(3) is not applicable in the case where suppression of fact is established, however, I am of the view that taking into overall facts and circumstances of the case and data was available in the books account and the appellant has paid entire service tax alongwith interest. In my view the appellant has made reasonable cause for invoking of Section 80. In view of my above discussion, I find that in terms of Section 80, appellant deserves waiver of penalty under Section 78, therefore, I waive the penalty. Confirmation of demand of the service tax alongwith interest and payment thereof is maintained. - Decided partly in favour of assessee.

Summary

Issues:
Short payment of service tax, imposition of penalty under Section 78, applicability of Section 73(3), suppression of fact.

Analysis:
The appeal was filed against an Order-in-Appeal upholding an order-in-original confirming short payment of service tax by the appellant, who is a registered service tax provider in the mining sector. The appellant had paid a partial amount without detection, and upon departmental scrutiny, the remaining balance was paid along with interest. The department issued a show cause notice proposing demand confirmation, interest, and penalty under Sections 76 and 78 of the Finance Act, 1994. The adjudicating authority confirmed the demand, interest, and imposed an equal penalty. The appellant contended that the short payment was due to an accounting mistake by a new clerk and voluntarily paid the amount upon detection. The appellant sought waiver of penalty under Section 78 invoking Section 73(3) as they had paid the entire service tax with interest before the show cause notice was issued.

The Revenue argued that there was suppression of fact as the short payment was not declared in ST3 returns or intimated to the department until pointed out. The Revenue contended that Section 73(3) immunity does not apply if there is suppression of fact, and the penalty under Section 78 was rightly upheld by the Commissioner. The Tribunal noted that while the appellant did not declare the correct service tax value in returns, the data was available in their books and was retrieved during scrutiny. As the appellant paid the entire service tax with interest upon detection, the Tribunal held that the penalty under Section 78 should not have been imposed. The Tribunal agreed that Section 73(3) does not apply in cases of established suppression of fact, but considering the overall circumstances and the availability of data in the books, the Tribunal found reasonable cause to waive the penalty under Section 78. Thus, the confirmation of demand with interest was maintained, but the penalty under Section 78 was waived, and the appeal was allowed accordingly.