2018 (3) TMI 25 - AT - Service Tax

Validity of SCN - tax liability with interest and penalty paid before issuance of SCN - Held that - Since the entire tax liability along with interest and penalty has been paid during the investigation and before the SCN, thereafter u/s 73(3) of the FA, the Revenue should not have issued the SCN because the Revenue has not been able to bring on record any evidence to show that there was intention to evade payment of service tax - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Confirmation of demand of service tax
- Appropriation of already paid amount
- Confirmation of interest liability
- Imposition of penalty under Section 78(1) of the Finance Act
- Request for waiver of show cause notice
- Applicability of Section 73(4A) of the Finance Act
- Payment of penalty under protest
- Compliance with judicial precedents

Confirmation of demand of service tax:
The appeal was against an order confirming a service tax demand of &8377; 1,27,60,369/- on a joint venture firm engaged in providing taxable output service related to the construction of residential complexes. The investigation revealed that the construction activities fell under the category of construction of residential complexes, making them liable for service tax under the Finance Act, 1994.

Appropriation of already paid amount:
The Commissioner confirmed the demand and appropriated the amount already paid by the appellant-assessee, along with confirming the interest liability. The appellant had voluntarily paid the service tax, interest, and penalty before a show cause notice was issued, citing Section 73(4A) of the Finance Act.

Imposition of penalty under Section 78(1) of the Finance Act:
The Commissioner imposed equal penalty under the second proviso to Section 78(1) of the Finance Act, in addition to confirming the interest liability and appropriating the already paid amounts. The appellant contested the imposition of this penalty, arguing that they had already paid the penalty as per Section 73(4A) and should not be subject to further penalties.

Request for waiver of show cause notice:
The appellant had requested a waiver of the show cause notice based on their voluntary payment of service tax, interest, and penalty as per Section 73(4A). Despite this, a show cause notice was issued, leading to the confirmation of the tax liability, interest, and penalties by the Commissioner.

Applicability of Section 73(4A) of the Finance Act:
The appellant argued that the impugned order was passed contrary to the provisions of Section 73(4A) of the Finance Act. They contended that the entire liability had been paid as per this section during the investigation, and the show cause notice should not have been issued.

Payment of penalty under protest:
The appellant paid the balance penalty of &8377; 13,32,675/- under protest, in addition to the penalty already paid as per Section 73(4A). They believed that this additional penalty was not required, as they had already fulfilled their penalty obligations under the relevant section.

Compliance with judicial precedents:
The appellant relied on judicial precedents such as Adecco Flexione Workforce Solution Ltd., Vinayaka Travels, and Continental Foundation Jt. Venture to support their argument that once the duty, interest, and penalty are paid as per Section 73(4A), there should be no need for a show cause notice. The Tribunal agreed with this interpretation and set aside the impugned order, allowing the appeal of the appellant-assessee with consequential relief.