2024 (1) TMI 85 - AT - Service Tax

Imposition of penalty of an amount equal to the amount of the demand confirmed - tax paid on being pointed out, much prior the issuance of the impugned show cause notice - HELD THAT - On perusal of proviso to Section 76(1) and 80 of the Finance Act, 1994, it is clear that where the payment of tax liability as demanded stands deposited by the assessee within 30 days of issuance of show cause notice, no penalty has to be imposed on such assessee. In the present case, the appellant -assessee deposited the amount no service did it was pointed out. Even show cause notice was not yet served, hence we hold that penalty should not have been imposed upon the appellant. It is also observed that plea of it to be an inadvertent error is taken by the appellant. Department also has not produced any evidence proving any positive act on part of appellant which may prove the intentional evasion of duty by the appellant. Hence while invoking Section 80, the penalty is not imposable. Resultantly, the order imposing penalty upon the appellant is set aside. Appeal allowed in part.

Summary

Issues involved: Demand of service tax on renting of immovable property, imposition of penalty on appellant.

Summary:

The judgment by the Appellate Tribunal CESTAT NEW DELHI dealt with a case involving the demand of service tax on renting of immovable property by the appellant. The department observed that the appellant had not paid service tax on the amount of building rent received from the bank, leading to a demand of Rs. 4,72,462. The Tribunal partially confirmed the demand but dropped the rest relying on a previous decision. However, a penalty was imposed on the appellant, which led to the appeal before the Tribunal.

Regarding the imposition of penalty, the appellant argued that the demand on rent was not deposited due to inadvertent error, and the payment was made before the issuance of the show cause notice. The appellant acknowledged the demand but challenged the penalty imposition. The Departmental Representative argued that the penalty was rightly imposed due to suppression on the appellant's part.

After hearing both parties, the Tribunal noted that the amount in question was paid by the appellant before the issuance of the show cause notice. The appellant did not dispute the liability towards the amount but contested the penalty. Relying on the provisions of Section 76(1) and 80 of the Finance Act, 1994, the Tribunal held that no penalty should be imposed if the tax liability is deposited within 30 days of the show cause notice. Since the appellant had deposited the amount before the notice was served, the penalty was deemed unjustified. The Tribunal found no evidence of intentional evasion by the appellant and set aside the penalty, partially allowing the appeal.

In conclusion, the Tribunal set aside the penalty imposed on the appellant, citing the timely payment of the tax liability and lack of evidence of intentional evasion. The appeal was partly allowed in favor of the appellant.