2016 (11) TMI 317 - AT - Service Tax

Imposition of penalty - liability of tax - Business Consultants Services - suppression of facts - It is noted from the records that the appellant herein had debited the CENVAT credit but on being pointed out by CERA paid the amounts in cash before the issuance of show-cause notice - Section 73(3) - Held that - the tax being discharged by debiting CENVAT account which is not disputed and as the interest such Service Tax liability also stands paid before the issue of show-cause notice we are of the view that provision of Section 73(3) gets attracted Revenue should not have issued any show-cause notice to appellant. Finding of the adjudicating authority as to suppression misstatement of facts seems to be incorrect as in fact appellant had paid the tax liability through debit in CENVAT and informed the Department. In our view the penalty imposed by the lower authorities is unwarranted and liable to be set aside - appeal disposed off - decided inn favor of appellant.

Summary

Issues involved:
Service Tax liability on Transportation of Goods by Road Service and Management or Business Consultants Services for the period April 2009 to May 2010.

Analysis:
The appeal was filed against an Order-in-Original passed by the Commissioner of Central Excise & Customs regarding Service Tax liability. The appellant used CENVAT credit for tax discharge on Transportation of Goods by Road Service and paid Service Tax on Management or Business Consultants Services. The appellant debited the CENVAT credit but paid the amounts before the show-cause notice was issued. The adjudicating authority alleged non-discharge of tax liability due to fraud, collusion, or suppression of facts. However, it was found that the appellant had paid the tax liability using CENVAT credit, as evidenced by ST-3 returns. The lower authorities erred in imposing penalties as the tax was discharged through CENVAT account, and interest was paid before the show-cause notice. The Tribunal held that Section 73(3) applied, and no show-cause notice should have been issued. The penalty imposed was deemed unwarranted and set aside.

The Tribunal upheld the demand for Service Tax liability and interest but set aside the penalty. It was concluded that the appellant had paid the tax amount using CENVAT credit, justifying the decision under Section 80 of the Finance Act, 1994. The appeal was disposed of accordingly, with the penalty being revoked due to the appellant's justified cause for payment through CENVAT credit.