2017 (5) TMI 1569 - AT - Service Tax

Penalty u/s 76(1) of Finance Act, 1944 - part Interest not paid before issuance of SCN - invocation of extended period of limitation - Held that - The appellant was issued a show cause notice invoking extended period in respect of very same issue. Subsequently also they have not discharged the service tax liability. They have not discharged entire amount of interest prior to issuance of show cause, and hence application of provision of Section 73(3) of Finance Act, 1994 which may not come to their help as also Section 18 of Finance Act, 1994 for the reason that they were held liable to pay interest by invoking extended period and have not done so - penalty upheld - appeal dismissed - decided against appellant.

Summary

Issues: Penalty imposed under Section 76(1) of Finance Act, 1994.

Analysis:
The appeal before the Appellate Tribunal CESTAT Hyderabad was directed against Order-in-Original No. HYD-EXCUS-004-COM-015-15-16, dated 17.06.2015. The issue for consideration in this appeal was the penalty imposed by the first appellate authority under Section 76(1) of the Finance Act, 1994. It was noted that the appellant had discharged part of the service tax liability before the issuance of the show cause notice, with the remaining amount paid at a later date. The appellant's counsel argued for setting aside the penalty imposed by the adjudicating authority. However, it was observed that the appellant had not fully discharged the interest liability before the issuance of the show cause notice. The appellant was issued a show cause notice invoking the extended period, and despite this, they did not discharge the entire service tax liability. Consequently, the provisions of Section 73(3) and Section 18 of the Finance Act, 1994 were not found to be applicable in their favor. As a result, the appeal was deemed to lack merit, and it was rejected by the tribunal.

This judgment highlights the importance of complying with tax liabilities, especially in cases where show cause notices are issued invoking extended periods. Failure to discharge the full tax liability before such notices can impact the applicability of relevant provisions under the law. The tribunal's decision underscores the significance of timely and complete fulfillment of tax obligations to avoid penalties and adverse legal consequences.