2009 (7) TMI 81 - AT - Service Tax

Waiver of penalty service tax deposited before issue of SCN - no allegation of fraud, collusion or willful mis-statement or suppression of facts with intent to evade payment of duty order of the commissioner (Appeals) setting aside the penalty maintained.

Summary

Issues: Recovery of interest under Section 75 of Finance Act, 1994 and imposition of penalty under Section 76 of the Act.

In this case, the original authority had ordered the recovery of interest and imposed a penalty under Section 76 of the Act. The Commissioner (Appeals) set aside the penalty, leading the Revenue to file an appeal seeking the imposition of the penalty. The Revenue argued that the delay in tax deposit justified the penalty. However, it was found that the respondents had voluntarily deposited the tax before the issuance of the show cause notice. The Commissioner (Appeals) referred to a CBEC clarification stating that if the tax and interest are deposited before the show cause notice, the proceedings under the Finance Act, 1994 would conclude. It was noted that there were no allegations of fraud or willful misstatement. Consequently, the penalty under Section 76 was deemed not applicable. The Tribunal concurred with the Commissioner (Appeals) that since the tax was deposited voluntarily before the notice and there were no fraudulent activities, collusion, or intent to evade payment, the penalty was rightly set aside.

Therefore, the Tribunal upheld the decision of the Commissioner (Appeals) and rejected the appeal filed by the Revenue, as there was no justification to interfere with the order. The judgment emphasized the significance of voluntary tax deposit before the show cause notice and the absence of fraudulent activities in determining the applicability of penalties under the relevant sections of the Act.