2019 (6) TMI 20 - AT - Service Tax

Imposition of penalty - Delayed payment of service tax with interest - liability was paid voluntarily though belatedly - no suppression of facts - Section 73 (3) of the Finance Act, 1994 - HELD THAT - The only and the obvious conclusion is that in the first place, the SCN itself was unnecessary and duty and interest having paid voluntarily, the Revenue cannot allege suppression or fraud and therefore, the penalty cannot be sustained for which reason the impugned order is set aside - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Allegation of suppression of service tax details in ST-3 return for certain months.
2. Imposition of penalty under various sections of the Finance Act, 1994.
3. Appeal against the Order-in-Original confirming demand of service tax, interest, and penalties.

Issue 1: Allegation of Suppression of Service Tax Details
The case involved a Show Cause Notice alleging suppression of services provided by a Goods Transport Agency (GTA) by not furnishing details in the ST-3 return for specific months. The appellant contended that the delay in computing transportation charges was due to delayed submission of bills by transporters. The appellant claimed to have paid the service tax, education cess, and interest voluntarily, which was acknowledged by the Revenue. The adjudicating authority confirmed the demand of service tax, interest, and imposed penalties under various sections of the Finance Act, 1994.

Issue 2: Imposition of Penalty
The Order-in-Original framed the issue of whether penalty should be imposed when the entire service tax and interest were paid before the issuance of the Show Cause Notice. The authority confirmed the demand of service tax, interest, imposed a penalty under Section 77 (2) of the Finance Act, and confirmed a penalty at 100% under Section 78, refraining from imposing a penalty under Section 76. The appellant appealed this decision to the Commissioner of Central Taxes (Appeals), who rejected the appeal, leading to the current appeal before the CESTAT Bangalore.

Issue 3: Appeal Against the Order
During the hearing, both parties presented their arguments. The appellant's counsel referred to Section 73 of the Finance Act, which allows the payment of service tax before the issuance of a Show Cause Notice. The counsel cited precedents from the Hon'ble jurisdictional High Court of Karnataka and other cases where it was held that if service tax and interest are paid before the issuance of a notice, no further action should be taken. The CESTAT Bangalore, considering the precedents and the facts of the case, concluded that the Show Cause Notice was unnecessary, and since the duty and interest were paid voluntarily, the Revenue could not allege suppression or fraud, leading to the setting aside of the penalty. The appeal was allowed, and the impugned order was overturned.

This detailed analysis of the judgment provides insights into the legal proceedings, arguments presented, and the final decision reached by the CESTAT Bangalore in this case.