2018 (8) TMI 1402 - AT - Service Tax

Waiver of penalty imposed u/s 77 and 78 of the Finance Act, 1994 - service tax paid on being pointed out before issuance of SCN - invocation of Section 73(3) of Finance Act - Held that - In the case of Gupta Coal Field & Washeries Ltd. vs. CST, Nagpur 2013 (3) TMI 224 - CESTAT, MUMBAI the Tribunal held that if assessee pays service tax alongwith interest on pointing out by the Revenue and intimated to the Department, in that circumstances, no show cause notice is required to be issued. The SCN was not required to be issued to the appellant, therefore, no penalty can be imposed on the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against penalty under Sections 77 and 78 of the Finance Act, 1994.

Analysis:
The appellant contested the penalties imposed on them under Sections 77 and 78 of the Finance Act, 1994. The case originated from an intelligence report indicating non-payment of service tax by the appellant. Following an investigation, the appellant paid the service tax along with interest and requested the Department to drop the proceedings under Section 73(3) of the Finance Act, 1994. Subsequently, a show cause notice was issued for penalty imposition, which was initially dropped by the adjudicating authority under Section 73(3) but later imposed by the Commissioner (Appeals). The appellant appealed against this penalty imposition.

During the hearing, the appellant disputed only the imposition of penalties as per the impugned order. Section 73(3) of the Act stipulates that if the assessee pays the service tax along with interest upon pointing out and informs the Department, a show cause notice is not necessary. In this case, the appellant complied with these requirements, and any show cause notice should have been issued within one year from the intimation date. However, the notice was issued after the limitation period had expired.

The Revenue relied on a decision by the Karnataka High Court to argue for penalty imposition. However, the Tribunal found this decision irrelevant as it involved a different scenario where interest was not paid by the appellant and pertained to the Central Excise Act, lacking similarity with Section 73(3) of the Act. Instead, the Tribunal referenced a case where it was held that no show cause notice is needed if the assessee pays the service tax with interest upon pointing out by the Revenue and informs the Department.

Consequently, the Tribunal concluded that since the show cause notice was not required to be issued to the appellant, no penalty could be imposed. The impugned order imposing the penalty was set aside, and the appeal was disposed of accordingly.