2013 (12) TMI 616 - AT - Service Tax

Waiver of pre deposit - Penalty u/s 76 & 77 - Demand of service tax - Erection, commissioning and business auxiliary services - Held that - penalty has been imposed u/s 76 & 77 of the Finance Act, 1994. Circular issued by the Board support the view that if service tax and interest are paid before issuance of show-cause notice, no proceedings are required to be initiated. This is supported by provisions under Section 73 of the Finance Act, 1994 also. Therefore, penalty under Section 76 cannot be sustained and accordingly is set aside - Decided in favour of assessee.

Summary

Issues:
1. Appellant not paying service tax on erection, commissioning, and business auxiliary services.
2. Imposition of penalty under Sections 76 & 77 of the Finance Act, 1994.

Analysis:
1. The appellant had taken registration and was paying Service Tax for maintenance & repairs services but was not paying tax on erection, commissioning, and business auxiliary services from 2003-04 to 2005-06. The appellant paid the full amount of service tax with interest upon discovery. However, a show-cause notice was issued proposing to appropriate the already paid amount towards tax, interest, and penalty. The appellant argued for SSI exemption eligibility, citing that the total value of services for each year was below Rs. 4 lakhs, hence no tax was collected or paid. The appellant relied on Circular No. 137/167/2006/CX-4 and tribunal decisions, including the case of Santhi Casting Works. The tribunal found that if service tax and interest are paid before the issuance of a show-cause notice, no further proceedings are required as per Section 73 of the Finance Act, 1994. Therefore, the penalty under Section 76 was set aside.

2. The imposition of penalty under Sections 76 & 77 of the Finance Act, 1994 was challenged by the appellant. The tribunal considered the circular issued by the Board and the provisions of Section 73 of the Finance Act, 1994, which state that if service tax and interest are paid before the issuance of a show-cause notice, no further proceedings are necessary. Based on this, the tribunal concluded that the penalty under Section 76 could not be sustained and was set aside. The tribunal's decision was in line with the legal provisions and supported by the circular, ensuring that the appellant was not subjected to additional penalties for the tax already paid.

This detailed analysis of the judgment highlights the issues involved, the arguments presented by the appellant, and the tribunal's reasoning behind setting aside the penalty under Sections 76 & 77 of the Finance Act, 1994.