2019 (11) TMI 836 - AT - Service Tax

Imposition of penalty u/s 78 of the Finance Act, 1994 - imposition of late fees u/r 7C of the Service Tax Rules, 1994 - extended period of limitation - HELD THAT - It is a fact on record that appellant availed service tax Registration on 08.10.2013, whereas investigation was started on February, 2014, as appellant started paying service tax of their own after obtaining registration - Extended period of limitation it is not invokable, moreover, appellant has paid service tax along with interest before issuance of the Show Cause Notice. In that circumstances, in terms of Section 73 (3) of the Act, no Show Cause Notice was required to be issued to the appellant. The proceedings initiated against the appellant through the impugned Show Cause Notice are set aside - the appeal is allowed to the extent by dropping the penalty and fine imposed on the appellant in the impugned order - appeal disposed off.

Summary

Issues:
Appeal against imposition of penalty under Section 78 of the Finance Act, 1994 and late fees under Rule 7C of the Service Tax Rules, 1994.

Analysis:
The appellant contested the penalty and late fees imposed on them for not obtaining service tax registration while providing taxable services. The appellant voluntarily registered for service tax in October 2013 and started paying the tax. An investigation initiated in February 2014 led to a Show Cause notice demanding service tax, interest, penalties, and fines. The Adjudicating Authority dropped the demand for the period before July 2012 but confirmed the remaining demand, along with penalties and fines. The Commissioner (Appeal) reduced the demand but upheld the penalties and fines. The appellant argued that as they paid the tax and interest before the Show Cause notice, no penalty or fine should apply. The Tribunal found that since the appellant registered and paid tax before the investigation, the extended limitation period did not apply. Therefore, no Show Cause notice was necessary as per Section 73 (3) of the Act. Consequently, the Tribunal set aside the proceedings and dropped the penalties and fines imposed on the appellant.

This judgment highlights the importance of timely compliance with tax regulations and the implications of voluntary registration and payment of taxes before any enforcement action. It clarifies the applicability of the limitation period and the necessity of a Show Cause notice in such circumstances. The decision emphasizes the legal provisions under the Finance Act, 1994 and the Service Tax Rules, 1994, ensuring fair treatment based on the appellant's actions and intentions.