2018 (7) TMI 1374 - AT - Service Tax

Penalties - the allegation is that the appellants have made expenditure in foreign currency towards the professional and consultancy charges in respect of which they had discharged the service tax liability - Held that - Regarding service tax demand of ₹ 13,01,708/-, the appellants have reversed the amount. As regards, service tax demand for the period, 2010-2011 and 2011-2012, they have paid the entire demand of service tax along with interest and the same stands appropriated by the adjudicating authority. It is also observed that the demand of ₹ 40,000/- being late fees for the service tax return for the period April, 2011 to September, 2011 and October, 2011 to March, 2012, has also been paid and there is no occasion to impose and the separate penalty for the same and the Commissioner (Appeals) has rightly set aside the same - Since the appellant-assessee has paid the entire amount of service tax along with interest before issuance of show-cause notice, the Commissioner (Appeals) has rightly set aside the penalty by invoking the provisions of Section 80. Penalties set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Appeal against imposition of penalties under Sections 77 and 78 of the Finance Act, 1994.
2. Appropriation of late fees for delayed submission of ST-3 Returns.
3. Setting aside of penalties by the Commissioner (Appeals).
4. Application of Section 80 in setting aside penalties.

Analysis:
1. The appeal was filed by the Revenue against the imposition of penalties under Sections 77 and 78 of the Finance Act, 1994. The appellant, a service tax assessee, had taken service tax credit during certain periods. The adjudicating authority confirmed demands for various periods and imposed penalties under Sections 77 and 78. However, the Commissioner (Appeals) set aside the penalties under these sections, leading to the Revenue's appeal. The Tribunal noted that the appellants had reversed the demanded amount for one period and paid the entire demand for other periods along with interest. As the entire service tax amount had been paid before the show-cause notice, the Commissioner (Appeals) rightly set aside the penalty invoking Section 80.

2. The case also involved the appropriation of late fees for delayed submission of ST-3 Returns. The Commissioner (Appeals) observed that the appellant had deposited the late fees towards late submission of returns for specific periods. The lower authority had failed to consider this payment, leading to the setting aside of the penalty of ?40,000 for late submission of returns. The Tribunal agreed with this observation and found no reason to impose a separate penalty for late fees already paid by the appellant.

3. The Tribunal upheld the decision of the Commissioner (Appeals) in setting aside the penalties imposed under Sections 77 and 78. It was noted that the entire service tax amount along with interest had been paid by the appellant before the issuance of the show-cause notice. Therefore, the penalties were rightly set aside by the Commissioner (Appeals) based on the provisions of Section 80.

4. Considering the above discussions, the Tribunal concluded that there was no reason to interfere with the order of the Commissioner (Appeals). Consequently, the appeal filed by the Revenue was dismissed, and the cross-objection was also disposed of. The Tribunal affirmed the decision to set aside the penalties and upheld the application of Section 80 in this matter.

(Dictated and pronounced in the open Court)