2017 (6) TMI 52 - AT - Service Tax

Penalty u/s 78 - intent to evade tax - Held that - the appellant has categorically proved or referred that there was no intention to evade and they paid the service tax along with interest before the issue of notice and the Revenue has not been able to bring any evidence on record to show that there was any intention on the part of the appellant to evade payment of tax - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against remand order for penalty determination under Section 78 of the Finance Act 1994.

Analysis:
The appeal challenged an order remanding the case for determining the penalty under Section 78. The appellant, registered under various services, availed service tax credit on input services related to trading activity. Audit revealed some ineligible credits, leading to a show-cause notice proposing penalty under Rule 15(3) of Cenvat Credit Rules. The appellant reversed the credits and interest on outward transportation and clearing services. The adjudicating authority confirmed the demand and penalty under Section 78. The Commissioner (Appeals) upheld the order partially, directing quantification of penalty under Section 78. The appellant contended that the impugned order was unsustainable as they rectified the error promptly, and there was no intent to evade tax. Citing relevant rules and case laws, the appellant argued against the penalty imposition.

The appellant argued that the impugned order was legally flawed as they rectified the error promptly, paid the service tax along with interest before any show-cause notice, and lacked intent to evade tax. The appellant emphasized that no evidence proved fraudulent intent or suppression of facts. The appellant highlighted that the audit officer did not allege intentional evasion during the audit. The appellant also challenged the invocation of penalty under Section 78, citing case laws in support of their position. The learned AR supported the impugned order's findings.

After considering submissions and evidence, the Tribunal held that the impugned order remanding for penalty determination under Section 78 was unsustainable. The Tribunal noted the appellant's prompt rectification, payment of tax with interest, and absence of evidence showing intent to evade tax. Consequently, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief. The judgment was delivered on 02/02/2017.