2024 (2) TMI 969 - AT - Service Tax

Levy of penalty under Section 78 when the service tax was paid along with interest before the issuance of show-cause notice - suppression of facts or not - Invocation of Extended period of limitation - HELD THAT - Except for stating that the show-cause notice has been issued only after conduct of audit and that the appellants have suppressed the material facts, no evidence has been put forth in the show-cause notice or in the impugned order to show that there has been a positive act of suppression on the part of the appellants to evade payment of duty. It is found that Tribunal has been consistent in holding that extended period cannot be invoked unless a positive act on the part of the assessee is evidenced showing the intent to evade payment of duty. It is also found that Tribunal has been taking a consistent view that a mere non-payment of service tax and non-filing of Returns would not be a sufficient reason to extend the period of limitation. Hon ble Karnataka High Court in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX VERSUS M/S ADECCO FLEXIONE WORKFORCE SOLUTIONS LTD 2011 (9) TMI 114 - KARNATAKA HIGH COURT held that The assessee has paid both the service tax and interest for delayed payments before issue of show cause notice under the Act. Sub-Sec.(3) of Sec. 73 of the Finance Act, 1994 categorically states, after the payment of service tax and interest is made and the said information is furnished to the authorities, then the authorities shall not serve any notice under Sub-Sec.(1) in respect of the amount so paid. The impugned order is not sustainable under law and is liable to be set aside - appeal allowed.

Summary

Issues involved:
The issue to be decided is whether the appellants are liable to pay penalty under Section 78 when the service tax was paid along with interest before the issuance of show-cause notice.

Summary:
The appellants registered under Service Tax and GST paid the service tax along with interest as pointed out by the audit. Subsequently, a show-cause notice was issued demanding service tax and interest, along with penalties under Sections 77 and 78 of the Finance Act, 1994. The appellant contended that the show-cause notice was time-barred and that no suppression of facts occurred. The appellant argued that the extended period for issuing the notice had expired, and the impugned order was passed without due consideration. The Department reiterated the findings of the impugned order.

The Tribunal found that no evidence of suppression of facts by the appellants was presented to invoke the extended period. It was noted that non-payment of service tax and non-filing of returns does not automatically warrant an extension of the limitation period. Citing legal precedents, including the case of Adecco Flexione Workforce Solutions Ltd., the Tribunal emphasized that authorities should not harass taxpayers who promptly pay service tax with interest. Additionally, the Tribunal highlighted the case of M/s G.D. Goenka Pvt. Ltd., which held that disputing the audit findings does not imply an intent to evade payment. The Tribunal concluded that the impugned order lacked legal sustainability and set it aside, allowing the appeal with consequential relief as per law.

Separate Judgment:
No separate judgment was delivered by the judges in this case.