2018 (10) TMI 700 - AT - Service Tax

Penalty u/s 78 of FA - Service tax alongwith Interest paid and declared in ST-3 returns prior to issue of show cause notice - Held that - Tribunal in the case of M/s Kanpur Cargo Movers Vs Commissioner of Central Excise & Service Tax, Kanpur 2017 (12) TMI 724 - CESTAT ALLAHABAD has held that if the service tax liability is paid and declared in ST-3 returns prior to issue of show cause notice then penalty under Section 78 ibid is not imposable - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Challenge to imposition of penalty under Section 78 of the Finance Act, 1994.

Analysis:
The judgment by the Appellate Tribunal CESTAT ALLAHABAD involved a challenge to the imposition of a penalty of ?3.69 crores under Section 78 of the Finance Act, 1994. The appellant had paid the entire service tax amount along with interest before a certain date and filed the return later. The show cause notice for the imposition of the penalty was issued after the appellant had already paid the tax liability and declared it in the returns. The Tribunal referred to a previous case where it was held that if the service tax liability is paid and declared before the issuance of the show cause notice, then the penalty under Section 78 is not applicable. Therefore, based on this precedent, the Tribunal set aside the penalty imposed under Section 78 of the Finance Act, 1994.

In conclusion, the impugned order was modified, and the appeal was allowed. The judgment highlighted the importance of timely payment and declaration of tax liabilities before the issuance of show cause notices to avoid penalties under Section 78 of the Finance Act, 1994. The decision was based on a precedent set by the Tribunal in a previous case, emphasizing the significance of compliance with tax regulations and procedures to prevent unnecessary penalties.