2008 (9) TMI 136 - AT - Service Tax

Real Estate Agent Sub-section (1A) of Section 73 inserted by Finance Act 2006 w.e.f. 18.4.06 - new provisions of Section 73(1A) is in existence at the time of issuance of SCN (21.4.06)- So Section 73(1A) is applicable - in terms of Section 73(1A) where such person has paid the service tax in full together with interest and penalty of 25% of the tax within 30 days of the receipt of the notice the proceedings shall be deemed to be concluded penalties u/s 76 and 77 are not sustainable

Summary

Issues:
1. Applicability of Section 73(1A) of the Finance Act, 1994 in a case involving service tax evasion.
2. Imposition of penalty under Sections 76 and 77 of the Act.
3. Interpretation of the proviso to Section 73(2) regarding conclusion of proceedings upon payment of service tax, interest, and penalty.

Analysis:
1. The case involved the Appellants providing services as "Real Estate Agents" without paying the due tax for the period of October 2004 to December 2005. Upon detection, they deposited the tax and were issued a show cause notice to confirm the demand, appropriate the amount deposited, and impose penalties. The Adjudicating Authority confirmed the tax demand, imposed penalties under Sections 76, 77, and 78, which the Commissioner (Appeals) upheld.

2. The Tribunal analyzed Section 73 of the Finance Act, 1994, which allows recovery of service tax in cases of non-payment or evasion. Sub-section (1A) inserted in 2006 pertains to cases involving fraud or willful misstatement. The Appellants, upon receiving the show cause notice, paid 25% of the tax within 30 days, invoking the proviso to Section 73(2). Citing precedents, the Tribunal held that the provisions in force at the initiation of proceedings apply. As the new provision of Section 73(1A) was in effect when the notice was issued, the Appellants' timely payment led to the conclusion of proceedings, rendering penalties under Sections 76 and 77 unsustainable.

3. The Tribunal's decision was based on the understanding that the Appellants complied with the requirements of Section 73(1A) by paying the tax, interest, and penalty within the stipulated time frame. Consequently, the penalties imposed under Sections 76 and 77 were set aside, and the appeal was allowed with consequential relief.

This detailed analysis highlights the Tribunal's interpretation of the relevant provisions, the timing of compliance by the Appellants, and the legal principles governing the conclusion of proceedings upon payment of dues in cases of service tax evasion.