2010 (3) TMI 590 - AT - Service Tax

Penalty - no mala fide and intention to evade payment of service tax - Once the lapse was pointed out, the appellants discharged the service tax liability along with the interest - waiver of show-cause notice when the assessee pays the service tax liability immediately after it is pointed out Held that - aside the same and restore the order of the Original Authority

Summary

Issues:
Appeal against Order-in-Appeal confirming Service Tax liability, interest, and penalties under sections 77 and 78 of the Finance Act, 1994. Applicability of section 73(3) in the case, invocation of larger period for suppression, and dispute regarding penalties.

Analysis:
The appellant, a club or association, filed an appeal against the Order-in-Original confirming Service Tax liability, interest, and penalties. The appellant contended that the Service Tax amount was quantified and paid immediately, invoking section 73(3) to argue against penalties. The appellant cited CBEC Circular and trade notices to support the claim. The Adjudicating Authority found suppression and invoked section 73(4) instead of section 73(3), leading to penalties under sections 77 and 78. The Tribunal noted that the appellant did not dispute the tax liability and interest paid before the show-cause notice, focusing only on the penalties imposed.

The Tribunal observed that the appellant registered in 2006 had paid the Service Tax amount ascertained by Central Excise Officers promptly. Referring to precedent decisions like Vee Aar Secure v. CST, the Tribunal held in favor of the appellant, emphasizing waiver of penalties under section 73(3) when the tax liability is paid promptly. The Tribunal highlighted the absence of mala fide intent and the appellant's immediate action upon notification of the lapse. Citing the Tribunal's decision in M/s. Majestic Mobikes (P.) Ltd., the Tribunal emphasized the importance of the Adjudicating Authority's discretion in penalty imposition under section 80 of the Finance Act, 1994. The Tribunal concluded that penalties under sections 77 and 78 were unwarranted in this case, setting aside the penalty imposition while upholding the Service Tax liability and interest payment.

In line with the precedents and considering the immediate payment of the quantified tax liability by the appellant, the Tribunal found the penalties under sections 77 and 78 unjustified. The Tribunal emphasized the waiver provision under section 73(3) and the importance of prompt tax payment upon notification. The Tribunal's decision aligned with the principles of fairness and adherence to legal provisions, ultimately setting aside the penalties while upholding the tax liability and interest payment made by the appellant.