2013 (7) TMI 487 - AT - Service Tax

Waiver of penalty u/s 80 - liability of service tax and a penalty u/s 78 - Held that - It is fit case for invocation of extended period as well as imposition of penalty under section 78 - section 83A only provides monetary limit for imposition of penalty and it has nothing to do with imposition of penalty no force in the contention of the appellant that the penalty should not be levied on them since they have deposited service tax but interest has been deposited later on - CBEC s Circular No. 137/167/2006-CX.4 relied upon by the CESTAT clearly supports the contention of the department wherein the provisions of Section 73 have been discussed - Assesse had not been able to conclusively prove that the material facts were in the notice of the department even prior to conduct of audit appeal decided against assessee.

Summary

Issues:
1. Liability of service tax and penalty under Section 78.
2. Admissibility of Cenvat credit.
3. Payment of service tax before the issue of Show Cause Notice.
4. Imposition of penalty under Section 78.
5. Invocation of extended period of limitation.
6. Application of Sections 73(3), 83A, and 80 of the Finance Act, 1994.

Liability of service tax and penalty under Section 78:
The appellant, engaged in trading automobile vehicles, provided after-sales services. The audit revealed inadmissible Cenvat credit and non-payment of service tax on various transactions. The Assistant Commissioner confirmed a demand for service tax, interest, and imposed a penalty under Section 78. The Commissioner (Appeals) upheld this decision, emphasizing the need for payment before the Show Cause Notice issuance.

Admissibility of Cenvat credit:
The audit highlighted the appellant's availing of Cenvat credit on labor charges, service tax, and software access fee. The appellant failed to discharge service tax on warranty income. The Commissioner (Appeals) affirmed the findings, citing misstatement and suppression of facts justifying the extended period of limitation.

Payment of service tax before the issue of Show Cause Notice:
The appellant argued that since they paid the service tax before the Show Cause Notice, no penalty should apply. However, the Commissioner (Appeals) noted that interest payment post-notice contradicted this claim, leading to penalty imposition under Section 78.

Imposition of penalty under Section 78:
The Commissioner (Appeals) and Assistant Commissioner found suppression of material facts, justifying the penalty. The appellant's failure to prove early departmental notice of the issues supported penalty imposition under Section 78.

Invocation of extended period of limitation:
The Commissioner (Appeals) correctly invoked the extended period due to misstatements and suppression discovered during the audit. The appellant's contention against this was dismissed.

Application of Sections 73(3), 83A, and 80 of the Finance Act, 1994:
The appellant's arguments regarding Sections 73(3), 83A, and 80 were refuted. The Commissioner (Appeals) clarified that Section 83A sets monetary limits, not affecting penalty imposition. The appellant's request for penalty waiver under Section 80 was rejected due to proven suppression of facts.

In conclusion, the appeal was dismissed, affirming the liability of service tax, interest, and penalty under Section 78. The judgment emphasized the importance of timely compliance and the consequences of non-payment or delayed payment in tax matters.