2009 (12) TMI 168 - AT - Service Tax

Consulting Engineering services- Penalty- The appellants are engaged in providing Consulting Engineering service and the Service Tax demand of Rs. 8,608 has been confirmed with penalties under various sections by the lower authorities. Held that- I find that the fact that the appellants failed to submit the returns and paying the service tax during the relevant period, is an admitted fact and as soon as the appellants came to know the liability, they had come forward on their own, without prompting action by the department. The contention that this amounts to suppression/mis-declaration with intention to evade duty, is not sustainable.

Summary

Issues:
Service tax demand confirmation with penalties under various sections for the period July 1997 to September 2002. Allegations of suppression and intention to evade duty. Interpretation of CBEC Circular dated 3-10-2007. Applicability of section 73 and section 80 of the law.

Analysis:

The appellants, engaged in providing Consulting Engineering service, faced a Service Tax demand confirmation of Rs. 8,608 with penalties under various sections for the period July 1997 to September 2002. A show-cause notice was issued on 17-4-2006. The Technical Member noted that the appellants voluntarily intimated the department about their liability to pay service tax in September 2002, following which they registered and paid the service tax in June 2003 after submitting returns for the relevant period. The show-cause notice in April 2006 alleged suppression and proposed penalties despite the payment made by the appellants. The appellant's counsel cited a CBEC Circular from 2007 to argue that proceedings should have concluded after payment of service tax and interest, without the need for a show-cause notice. The Technical Member agreed that the appellants' voluntary compliance upon realizing their liability did not amount to suppression or mis-declaration with an intention to evade duty. The failure to submit returns and pay service tax during the relevant period was attributed to ignorance rather than deliberate evasion. The Technical Member found the appellant's actions in discharging the full liability with interest voluntarily in line with the spirit of section 73, which provides for the conclusion of adjudicating proceedings. Additionally, a lenient view under section 80 was deemed justifiable given the circumstances.

The Technical Member, considering the simplicity of the issue and the small amount involved, waived the pre-deposit and stay petition, proceeding to allow the appeal with consequential relief. The stay petition was also disposed of in light of the discussion and findings regarding the appellant's compliance and the interpretation of relevant legal provisions.