2010 (1) TMI 277 - AT - Service Tax

Penalty stay pre deposit Held that - There is no dispute about the fact that the appellant voluntarily paid service tax on 31-3-2006 and 25-4-2006 and the notice for imposition of penalty was issued much later on 28-11-2007. There is also no allegation of any fraud, collusion and wilful suppression of facts with intention to evade payment of service tax. Therefore, prima facie, this case appears to be covered by the provisions of Sub-section (3) of Section 73 of the Finance Act, 1994, read with Board s Circular No. 137/167/2006-CX 4, dated 3-10-2007. This Circular clearly says that once the proceedings under Section 73(3) are concluded, all the proceedings including those under Section 76, 77 & 78 also shall be concluded. pre deposit waived.

Summary

Issues:
1. Waiver of pre-deposit of penalty under Section 76 of the Finance Act, 1994.
2. Applicability of provisions of Sub-section (3) of Section 73 and Board's Circular No. 137/167/2006-CX 4, dated 3-10-2007.

Analysis:
1. The appellant, a provider of Business Auxiliary Services, failed to pay service tax for the period from July 2005 to March 2006, which was later paid voluntarily along with interest. A penalty of Rs. 38,679 was imposed under Section 76 of the Finance Act, 1994. The Commissioner (Appeals) upheld the penalty, stating that the case was a default in payment, not covered under the Board's Circular applicable to fraud or collusion cases. The appellant sought waiver of pre-deposit of penalty, arguing that their case falls under Sub-section (3) of Section 73, allowing payment before notice is served. The Tribunal found no fraud or wilful suppression and agreed that the case was covered by the said provisions and Circular. Consequently, the requirement of pre-deposit of penalty was waived for the appeal hearing, and the stay application was allowed.

2. The appellant contended that they paid the service tax voluntarily before any notice was served, as allowed under Sub-section (3) of Section 73. They argued that as per the Board's Circular, once proceedings under Section 73(3) are concluded, all related proceedings under Sections 76, 77 & 78 should also end. The Department argued that the appellant defaulted in paying service tax by the due date, justifying the penalty under Section 76. However, the Tribunal noted that there was no evidence of fraud or wilful suppression, making the case eligible for the waiver of pre-deposit of penalty. The Tribunal emphasized the importance of the Circular in concluding all proceedings once Section 73(3) proceedings are completed, supporting the appellant's plea for waiver.

This detailed analysis of the judgment highlights the key issues of waiver of pre-deposit of penalty and the application of relevant legal provisions and circulars, providing a thorough understanding of the Tribunal's decision.