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2023 (12) TMI 854 - HC - Service TaxPenalty for delayed payment of tax - Seeking review of the order - Review Petitioner contended that, it is incorrect to state that evasion of service tax has come to the notice of the Department only after detailed investigation of the assessee account - HELD THAT - As per second proviso of Section 73, if the tax is paid within a period of 30 days, the penalty payable would be within a period of 30 days of the date of service of the notice under proviso to sub Section (1) of Section 73, the penalty payable shall be 15% of such service tax and proceedings in respect of such service tax, interest and penalty shall be deemed to be concluded - In the case on hand, notice under Section 73(1) of the Act came to be issued by the authorities, the first show cause notice issued by the authorities is on 08.08.2007. Again, the second show cause notice was issued on 18.09.2008. The material on record would also disclose that the service tax has been paid subsequently with accrued interest even before the show cause notice has reached the review petitioner - Surprisingly, the Additional Commissioner has observed in his order that the service tax has not been paid. The show cause notice itself shows that there was a payment of service tax along with interest by the review petitioner. Therefore, the order of the Additional Commissioner is factually incorrect. This Court is of the considered opinion that a case is made out by the Review Petitioner RP No.384/2022 to pay a sum of Rs.2,50,000/- towards penalty proceedings initiated by the Department and put an end to the litigation. Revision petition disposed off.
Issues Involved:
1. Delay in payment of service tax and interest. 2. Issuance and response to show cause notices. 3. Applicability of extended period of limitation and penalty under Section 78 of the Finance Act, 1994. 4. Review of previous court order based on new evidence. Summary: 1. Delay in Payment of Service Tax and Interest: The petitioner, a Chartered Accountant firm, was appointed as an internal auditor for Karnataka State Financial Corporation (KSFC). Due to delayed payments from KSFC, the petitioner delayed paying service tax but eventually paid it with interest. Despite this, the Department issued a show cause notice. 2. Issuance and Response to Show Cause Notices: The Department issued a show cause notice on 08.08.2007 without specifying work details. The petitioner replied on 01.10.2007. Another show cause notice was issued on 18.09.2008, which the petitioner also replied to, explaining the delay in payment and denying suppression of facts. 3. Applicability of Extended Period of Limitation and Penalty Under Section 78 of the Finance Act, 1994: The Department invoked the extended period of limitation under Section 73(1) of the Finance Act, claiming suppression of facts. The petitioner argued that once service tax and interest were paid, the extended period should not apply. The Additional Commissioner imposed a penalty, which was upheld by appellate authorities and the High Court. The petitioner contended that the penalty was unjust as the service tax and interest were paid before the show cause notice and that there was no willful misstatement or suppression of facts. 4. Review of Previous Court Order Based on New Evidence: The petitioner filed a review petition, arguing that the original order was based on a letter from KSFC, which could not be traced. The petitioner provided a reply from KSFC obtained under the Right to Information Act, indicating no such letter existed. The court acknowledged the new evidence and the fact that service tax was paid before the show cause notice. The court noted the absence of the KSFC letter and the factual error in the original order. Conclusion: The court decided to dispose of the review petition by directing the petitioner to pay Rs. 2,50,000 as a penalty, considering the new evidence and the elapsed time, thus concluding the proceedings.
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