2015 (12) TMI 747 - AT - Service Tax

Penalty u/s 76 - delayed payment of service tax - Held that - Appellant has paid the service tax along with interest in their own detection. In these circumstances, show cause notice was not required to be issued as per the provisions of Rule 73(3) of the Act. But without application of mind, the show cause notice was issued and thereafter the same was adjudicated and penalty was also confirmed against the appellant. This shows the arrogance of the official for imposing penalty on the appellant. As discussed above, that the show cause notice was not required to be issued to the appellant. Therefore, I set aside the penalty imposed on the appellant - Decided in favour of assessee.

Summary

Issues:
Appeal against penalty under Section 76 of the Finance Act, 1994.

Analysis:
The appellant appealed against the imposition of a penalty under Section 76 of the Finance Act, 1994. The appellant had paid the service tax along with interest on their own detection, following which a show cause notice was issued to appropriate the amount paid and impose a penalty. The penalty was confirmed by the learned Commissioner (Appeals), leading the appellant to appeal the decision.

The appellant argued that since they voluntarily paid the service tax upon detection, as per Section 73(3) of the Finance Act, 1994, a show cause notice was not required to be issued. Therefore, the appellant contended that the penalty should not be imposed in this scenario. On the contrary, the learned AR supported the impugned order, advocating for the penalty to be upheld.

After hearing both parties and considering the submissions, it was observed that the appellant had indeed paid the service tax along with interest upon their own detection. Consequently, as per the provisions of Rule 73(3) of the Act, a show cause notice was not necessary in this case. The issuance of the show cause notice and subsequent imposition of penalty without proper consideration demonstrated an arbitrary approach by the official. Therefore, the penalty imposed on the appellant was set aside, and the appeal was allowed by overturning the impugned order. The judgment was dictated and pronounced in open court.