2017 (12) TMI 716 - AT - Service Tax

Validity of SCN - whether the SCN is time barred? - service tax collected but not paid - Held that - immediately on pointing out by the audit, the respondent paid entire amount of service tax along with interest and even excess amount of service tax was paid by the respondent. Further, it has been explained by the respondent that why they could not pay service tax in time as they were regularly paying their service tax liability for the last four to five years - demand with interest upheld. Penalty - Held that - as the respondent is not disputing their service tax liability along with interest. The same has been accepted by the respondent. Further, the excess amount paid by the respondent has been refunded; in that circumstance, the provisions of Section 73(3) of the Act are invokable, therefore, no penalty is imposable on the respondent. Appeal allowed in part.

Summary

Issues:
- Appeal against the order holding show-cause notice as time-barred
- Invocability of extended period of limitation
- Liability to pay service tax and interest
- Imposition of penalties under the Finance Act, 1994
- Applicability of Section 73(3) for penalty imposition

Analysis:

Issue 1: Appeal against time-barred show-cause notice
The Revenue appealed the order claiming the Commissioner erred in holding the show-cause notice as time-barred. The case involved non-payment of service tax during specific periods, detected during an audit. A show-cause notice was issued invoking the extended period of limitation. The adjudicating authority confirmed the demand and penalties. The Commissioner (A) dropped the proceedings, leading to the Revenue's appeal.

Issue 2: Invocability of extended period
The Revenue argued that non-payment was detected only during the audit, justifying the invocability of the extended period due to suppression of facts. Citing legal precedents, the Revenue supported the need for invoking the extended period.

Issue 3: Liability to pay service tax and interest
The respondent explained that they paid the service tax immediately upon detection during the audit. They attributed the delay to unforeseen circumstances, like an accident affecting the responsible person. The respondent admitted the liability for service tax and interest, even refunding the excess amount paid.

Issue 4: Imposition of penalties
The Commissioner (A) observed the respondent's voluntary calculation and payment of service tax before the show-cause notice. Despite confirming the demand, the Commissioner invoked Section 73(3) to argue against imposing penalties due to the respondent's genuine belief and prompt payment upon detection.

Conclusion:
After considering the submissions, the tribunal confirmed the demands but dropped the penalties against the respondent. The order highlighted the respondent's prompt payment upon detection, genuine belief, and refund of excess amount. The appeal was disposed of with this decision, emphasizing the invocability of Section 73(3) to waive penalties in the given circumstances.