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2019 (7) TMI 1660 - AT - Service TaxIssuance of SCN - Levy of penalty - entire Service Tax along with interest much before the issuance of the SCN - mining services - HELD THAT - The Appellant has already paid the entire Service Tax along with interest much before the issuance of the SCN and hence there is no cause of action to issue the SCN by the department. Also, the mining services was introduced in June 2007 and there was lot of confusion on the actual taxability of the said services. However, once it was ascertained by the department that tax is payable, the Appellant did not dispute its liability and made immediate attempt to pay the same with interest. The issue at hand is no more res integra and is covered by the decision of the Tribunal in the case of COMMISSIONER OF SERVICE TAX, KOLKATA VERSUS RUHIT SHUKLA ASSOCIATED 2007 (3) TMI 164 - CESTAT, KOLKATA where it was held that There is no difference of opinion about realization of levy from the Respondent in view of incidence of the levy by specific letters of law. But discharge of tax liability was delayed which appears to be neither deliberate nor willful or for knowable breach of law. The levy was at the initial stage and subject to Judicial review by various High Court. It was certainly a matter of confusion by tax payers on various aspects of law at the infancy stage of enactment, the imposition of penalty is not called for. The facts of the present case are squarely covered by the aforesaid decision of the Tribunal - the impugned orders are set aside to the extent of confirmation of penalty on the Appellants - Appeal allowed in part.
Issues:
1. Demand of Service Tax along with interest and penalties. 2. Validity of Show Cause Notice (SCN) issuance. 3. Applicability of penalty under section 78 of the Finance Act, 1994. 4. Interpretation of tax liability in the case of 'mining services'. 5. Precedents supporting non-imposition of penalty in similar circumstances. Analysis: 1. The case involved a demand for Service Tax, interest, and penalties on an appellant engaged in Iron ore mining activity in Orissa. The appellant had already paid the demanded amount before the issuance of the Show Cause Notice (SCN). The Adjudicating Authority confirmed the demand and imposed penalties under section 78 and section 77 of the Finance Act, 1994. The appellant appealed to the Tribunal challenging the penalties imposed. 2. The Tribunal noted that the appellant had paid the entire Service Tax along with interest before the SCN was issued. The Tribunal also considered the introduction of 'mining services' in 2007, causing confusion regarding taxability. However, once the tax liability was confirmed, the appellant promptly paid the amount with interest. The appellant cited various Tribunal decisions supporting non-imposition of penalties in similar situations. 3. The Authorized Representative for the Revenue defended the impugned order, justifying the penalties imposed. After hearing both parties and examining the records, the Tribunal found that the issue was settled by a previous decision involving similar circumstances. The Tribunal referred to the decision in the case of Commissioner of Service Tax, Kolkata Versus Ruhit Shukla & Associated, which emphasized the importance of reasonable cause for penalty exemption under Section 80 of the Finance Act, 1994. 4. The Tribunal concluded that the facts of the present case aligned with the principles established in the referenced decision. Therefore, the impugned orders confirming penalties on the appellant were set aside, and the appeal was partly allowed. The Tribunal emphasized the relevance of reasonable cause for penalty exemption and the impact of public relation announcements on taxpayer compliance with tax obligations. 5. The judgment highlighted the significance of timely tax liability discharge, the confusion surrounding new tax regulations, and the applicability of penalty exemptions under the Finance Act, 1994. The decision provided clarity on penalty imposition based on reasonable cause and the impact of public announcements on taxpayer behavior.
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