2018 (8) TMI 1403 - AT - Service Tax

Penalty u/s 76 - late fee u/s 70 of the Finance Act, 1994 read with Rule 7C of the Service tax Rules, 1994 - no suppression of facts - Section 73(3) of Finance Act - Time Limitation - Held that - There is no allegation of suppression of facts on the part of the appellant. It is a fact on record that appellant has filed ST-3 return on 21.08.2012 with delay and that fact was in the knowledge of the Department, therefore, show cause notice dated 20.04.2015 is highly time barred - on limitation itself demand is not sustainable. Moreover, in terms of Section 73(3) of the Act, it is clear mandate that if assessee pays service tax on pointing out by the Department, in that circumstances, no show cause notice is required to be issued to the appellant - Admittedly, in this case, it was in the knowledge of the Department that appellant has paid service tax alongwith interest with a delay, therefore, Section 73(3) of the Act is applicable to the facts of this case. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against imposition of penalty under Section 76 and late fee under Section 70 of the Finance Act, 1994 read with Rule 7C of the Service tax Rules, 1994.

Analysis:
The appellant appealed against an order imposing penalty under Section 76 and late fee under Section 70 of the Finance Act, 1994. The appellant had paid the service tax for the period 2010-11 and 2011-12 with interest but filed the ST-3 returns with a delay, which was discovered during an audit. A show cause notice was issued later to impose penalties. The appellant argued that no show cause notice was required as the Department was already aware of the delayed filings and payments. The Revenue contended that penalties were justified due to the late filing of returns. After hearing both parties, it was observed that there was no allegation of suppression of facts by the appellant, and the Department was aware of the delayed filings. Therefore, the show cause notice issued later was considered time-barred, rendering the demand unsustainable.

Moreover, Section 73(3) of the Act mandates that if the assessee pays service tax upon being pointed out by the Department, no show cause notice is necessary. As the Department was already aware of the delayed payments, this provision applied to the case. Since there were no allegations of fraud, wilful misstatement, or intention to evade tax, Section 73(4) was deemed inapplicable. Consequently, it was held that the show cause notice should have been issued, and the penalties imposed on the appellant were deemed unsustainable. The impugned order was set aside, and the appeal was allowed with any consequential relief.

In conclusion, the judgment focused on the necessity of a show cause notice in cases where the Department is already aware of delayed payments, as per Section 73(3) of the Act. It emphasized the importance of following procedural requirements and ensuring that penalties are imposed in accordance with the law, especially in the absence of fraudulent intent or suppression of facts by the taxpayer.