2023 (10) TMI 386 - AT - Service Tax

Levy of penalty - Issuance of SCN - Service tax along with interest paid before issuance of SCN - delay in payment occurred only on the understanding and accounting with regard to the new amendment which was brought forth with effect from 10.05.2008 - HELD THAT - The appellant has paid up the service tax along with interest much before issuance of show cause notice. There was also an issue of irregularly availed cenvat credit. The appellant has paid up this amount also along with interest. The show cause notice itself shows that the amount paid up by the appellant is to be appropriated. In such circumstances, as per sub- section (3) of Section 73 of the Finance Act, 1994, the department ought not to have issued any show cause notice. Further, it can also be seen that the delay in payment of service tax was due to transition / amendment that was brought forth w.e.f. 10.05.2008 with regard to the liability to pay service tax on book adjustment by Associated Enterprises. As the appellant has paid up the entire amount of service tax / wrongly availed cenvat credit along with interest much before issuance of show cause notice, it is opined that as per sub-section (3) of Section 73 of the Finance Act, 1994, no show cause notice ought to have been issued to the appellant. The penalty imposed on the appellant under Section 77, 78 of the Finance Act, 1944 and under Rule 15 of CCR 2004 therefore requires to be set aside. The impugned order is modified to the extent of setting the penalties imposed without disturbing the confirmation of service tax, interest and the appropriation thereof - appeal disposed off.

Summary

Issues involved: Alleged non-payment of service tax, imposition of penalties under Section 78 of the Finance Act, 1994.

Summary:
The appellant was issued a show cause notice for alleged non-payment of service tax for the period May 2008 to March 2011, along with penalties under Section 78 of the Finance Act, 1994. The original authority confirmed the demand, interest, and penalties. The appellant contended that the entire demand of service tax was paid on different dates from 12.04.2011 onwards, including interest. The appellant argued that no show cause notice should have been issued as the tax and interest were paid before the notice was issued. The appellant also highlighted a transition/amendment in service tax payment rules from 10.05.2008. The Tribunal found that the appellant had paid the service tax and interest before the show cause notice was issued, and the penalties imposed were not justified. The penalties under Section 77, 78 of the Finance Act, 1994, and Rule 15 of Cenvat Credit Rules, 2004 were set aside. The confirmation of service tax and interest was upheld. The impugned order was modified to reflect the setting aside of the penalties without affecting the confirmation of service tax and interest. The appeal was disposed of accordingly.