2015 (11) TMI 1107 - AT - Service Tax

Penalty u/s 76, 77 & 78 - Benefit u/s 73(3) - Payment of service tax before issuance of SCN - Held that - Appellant has deposited the entire dues alongwith interest on 02/02/2010, immediately on being pointed out by the Revenue. It is also appearing from the records that the appellant has intimated to the department about payment particulars vide their letter dated 14/05/2010 & the same was acknowledged by the department and also wrote a letter to the Commissioner, Central Excise Nagpur for waiver from penalties and not to issue any show-cause notice. - if the assessee has discharged the service tax liability on his own ascertainment or on the basis of ascertainment by the Central Excise Officers and informs the Central Excise Officer of payment of such service tax then, no notice under sub-section (1) of Section 73 in respect of the amount so paid shall be served. In the instant case, the appellant discharged the tax liability for the period 2007-08 to 2009-10 along with interest on 02/02/2010 - provisions of sub-section (3) of Section 73 is clearly attracted in the facts of the case and issuance of a show-cause notice for demand of service tax and imposition of penalties was not at all warranted. - Decided in favour of assessee.

Summary

Issues:
Confirmation of penalty under sections 76, 77 & 78 of the Finance Act.

Analysis:

The appellant, a manufacturer of motor vehicle parts and aluminum castings, was found to have not paid service tax for the period 2007-08 to 2009-10. Although the appellant paid the dues along with interest upon discovery, a show-cause notice was issued demanding the unpaid tax amount and proposing penalties under sections 76, 77, and 78 of the Finance Act. The appellant contested the notice, claiming it was not a deliberate default and seeking the benefit of Section 73(3) as they had admitted the tax liability and paid it before the notice was issued. Despite their contentions, the demand and penalties were confirmed in the original order, leading to an appeal before the learned Commissioner (Appeals), who upheld the decision. Subsequently, the appellant appealed to the Tribunal.

During the hearing, it was noted that the appellant had promptly paid the dues with interest upon being informed by the Revenue. The appellant also informed the department about the payment details and requested waiver from penalties. Section 73(3) of the Finance Act was examined, which states that if the taxpayer pays the service tax liability before receiving a notice, no further notice shall be served. Considering this provision, it was concluded that the appellant had fulfilled the requirements by paying the tax liability promptly upon notification by the Revenue. Therefore, the issuance of the show-cause notice and imposition of penalties were deemed unwarranted.

Consequently, the Tribunal held that the appellant was entitled to the benefit under Section 73(3) of the Finance Act as they had paid the tax and interest with proper intimation. As a result, the penalties imposed under sections 76, 77, and 78 were set aside, and the appellant was granted a refund of any penalties deposited within two months from the date of the order. The appeal was allowed, providing the appellant with consequential benefits.