2018 (1) TMI 426 - AT - Service Tax

Validity of SCN - Section 73(4A) of the Finance Act, 1994 - Held that - if during the course of investigation it has been found that the assessee has first paid service tax, in that circumstance, if the amount is short paid has been paid by the assessee along with interest and penalty equal to 1% of such tax for each month for the period default continues, in that circumstance, no SCN is required to be issued to the assessee. Admittedly, in this case the respondent has paid amount of service tax during the period of default. Therefore, the provisions of Section 73(4A) of the Act is squarely applicable to the facts of this case. Appeal dismissed.

Summary

Issues:
Appeal against dropping of proceedings under Section 73(4A) of the Finance Act, 1994.

Analysis:
The case involved an appeal by the Revenue against the dropping of proceedings under Section 73(4A) of the Finance Act, 1994 by the ld. Commissioner (Appeal). The respondent had paid the service tax along with interest and penalty during the default period, as required by Section 73(4A), and informed the department accordingly. Subsequently, a show cause notice was issued to the respondent for appropriating the amount paid and imposing a penalty under Section 78 of the Act. The adjudicating authority upheld the penalty and appropriation. However, the Commissioner (Appeal) allowed the benefit of Section 73(4A) after examining the proviso to the section, leading to the Revenue's appeal.

The grounds of appeal by the Revenue argued that the respondent did not mention the receipt of money at the relevant time in their accounts, and therefore, the provisions of Section 73(4A) were not applicable. The Revenue contended that the details in the books of accounts were not true and correct. However, the Commissioner (Appeal) had examined the provisions of Section 73(4A) and found them applicable. The section allows for payment of service tax, interest, and penalty by the assessee during the default period without the need for a show cause notice if the true and complete details are available in the specified records.

The Tribunal noted that the respondent had indeed paid the service tax during the default period, making Section 73(4A) applicable in this case. The Tribunal found that the facts were undisputed and that the appeal was filed without proper application of mind. Consequently, the appeal was dismissed for lacking merits.

In conclusion, the Tribunal upheld the dropping of proceedings under Section 73(4A) of the Finance Act, 1994, as the respondent had complied with the requirements of the section by paying the service tax, interest, and penalty during the default period. The appeal by the Revenue was dismissed due to the undisputed facts and the failure to apply the relevant legal provisions.