2016 (11) TMI 319 - AT - Service Tax

Invocation of Section 73(3) and/or 80 of the Finance Act, 1994 - waiver of penalty imposed under Section 78 - service of Commercial Construction Service, Works Contract and Goods Transport Services - payment of tax and interest, and furnishing of all documents before issuance of SCN - whether invocation of section 73 (3) justified? - Held that - the appellant admittedly recorded the entire transaction of their provision of service in their books of account. The appellant had no intention to evade the service tax which along with interest was discharged before the issuance of show cause notice without any protest. In such circumstances the case of the appellant is covered under Section 73 (3). As per the plain reading of section 73(3), it is clear that if the assessee on his own ascertainment pay the service tax along with interest without protest. In such case no show cause notice should be issued. In the present case the appellant have discharged the service tax along with interest before issuance of show cause notice. It is further noted that the appellant have declared the entire transaction in their books of accounts. Therefore no suppression of fact can be attributed for delayed payment of service tax. Therefore, the appellant s case is squarely covered by Section 73(3) of the Act, and the appellant was not required to be served with the show cause notice. Consequently, no adjudication is required and penalty could not have been imposed. We, therefore drop the penalty imposed under Section 78 invoking Section 73(3) of the Finance Act, 1994. The payment of Service Tax and interest thereupon made by the appellant is maintained - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appellant seeking waiver of penalty under Section 78 invoking Section 73(3) and/or 80 of the Finance Act, 1994.

Detailed Analysis:

Issue 1: Waiver of Penalty under Section 78
- The appellant, engaged in Commercial Construction Service, Works Contract, and Goods Transport Services, failed to pay service tax timely from April 2007 to December 2007.
- Department directed the appellant to pay service tax liability and produce evidence. Appellant paid service tax, interest, and filed ST-3 Returns after a notice.
- The department proposed demand and penalty under Sections 76, 77, and 78. Ld. Commissioner confirmed the demand, interest, and imposed a penalty of ?1,31,58,861 under Section 78.
- Appellant contended that it was a delay in payment due to financial difficulty, not evasion. Cited judgments to support waiver under Section 73(3) and 80.
- Revenue argued against waiver citing financial crisis not a sufficient ground. Referenced judgments supporting their stance.

Issue 2: Interpretation of Section 73(3)
- Tribunal found that the appellant recorded all transactions, paid service tax with interest pre-notice, and had no intention to evade tax.
- Section 73(3) allows the payment of service tax and interest without a show cause notice if done on own ascertainment.
- Since appellant paid tax and interest before the notice, no suppression of facts or intent to evade tax was found.
- Tribunal held that appellant's case falls under Section 73(3), no adjudication was required, and penalty under Section 78 was dropped.
- Upheld the payment of service tax and interest, allowing the appeal.

This judgment highlights the importance of timely payment of service tax, the applicability of Section 73(3) for waiver of penalty under Section 78, and the necessity of maintaining accurate records to demonstrate compliance with tax laws.