2019 (12) TMI 726 - AT - Service Tax

Levy of interest and penalty - appellants have voluntarily made the payment of tax before issuance of SCN and requested for waiver of show-cause notice - Board clarification F.No. 137/46/2015 ST dated 18/08/2015 - imposition of penalty - HELD THAT - The payment of 15% penalty was voluntary and based on this voluntary payment, show-cause notice was waived and there was no protest raised by the appellant while making the payment. Further, as per the Board clarification dated 18/08/2015, payment of penalty without issuance of show-cause notice was in accordance with law. Further, the claimant had filed a declaration while seeking waiver of show-cause notice that the amount paid will not be sought as refund. Appeal dismissed - decided against appellant.

Summary

Issues:
Refund claim of service tax rejection based on voluntary payment of penalty without issuance of show-cause notice and waiver of appeal rights.

Analysis:
The appellant, engaged in rendering taxable services, filed a refund claim of service tax, interest, and penalty, later realizing the unnecessary payment of interest and penalty due to sufficient cenvat credit balance. The respondent issued a show-cause notice questioning the refund claim's substantiation, considering it an afterthought to reopen a closed issue. The Assistant Commissioner rejected the refund claim, upheld by the Commissioner, leading to the present appeal.

The appellant argued against the penalty imposition, citing no suppression, timely tax and interest payment, and lack of sufficient time to produce documents. They contended for a refund of all payments made to the Revenue, emphasizing the penalty payment under a mistake of law. The appellant relied on legal precedents supporting their stance.

The respondent defended the denial of refund, highlighting the voluntary nature of the penalty payment during audit, waiver of show-cause notice, and adherence to Board clarifications allowing penalty payment without notice issuance. The respondent justified invoking Section 73 for service tax demand under suppression, fraud, or misstatement grounds.

In the judgment, it was noted that the voluntary penalty payment led to show-cause notice waiver, with no protest from the appellant. The Board's clarification supported penalty payment without notice issuance. The appellant's declaration against seeking a refund of the paid amount further strengthened the denial of refund by the Commissioner. The judgment emphasized the Commissioner's reasoning for denial, citing specific findings and legal references.

The judgment dismissed the appeal, finding no fault in the impugned order. The decisions cited by the appellant were deemed inapplicable to the case's circumstances. The judgment upheld the denial of the refund claim based on the voluntary penalty payment and the appellant's conscious actions, protecting the Revenue's interest.