2016 (11) TMI 239 - AT - Service Tax

Issuance of SCN - section 73(3) of Finance Act, 1994 - Held that - appellant having discharged the service tax liability and interest, though being pointed out by the officers during a visit, are eligible for the benefit of provisions of section 73(3) of Finance Act, 1994. The said section provides for non-issuance of show-cause notice in the case the assessee discharged the service tax liability and the interest thereof on his own ascertainment on being pointed out by the officers. In the case in hand, appellant being a public sector undertaking may have overlooked the provisions of Business Auxiliary Service and on being pointed out discharged the entire tax amount with interest. In our view, this is a fit case wherein the revenue authorities should not have issued any show-cause notice as per the provisions of 73(3) of Finance Act, 1994. Appellant has made out a case for setting aside the penalties imposed under Section 78, as provisions of Section 73(3) will apply in its full force. We also hold that it is a fit case for invoking Section 80 of the Finance Act, 1994 to set aside the penalty imposed by the adjudicating authority. The service tax liability and the interest upheld and penalty imposed by the adjudicating authority set aside by invoking provisions of Section 80 of the Finance Act, 1994 - appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Non-payment of service tax under Business Auxiliary Service category for the period July 2003 to March 2007.

Analysis:
The case revolved around the non-payment of service tax under the Business Auxiliary Service category for a specific period. The appellant, a public sector undertaking, was found to be promoting and marketing various products manufactured by others and receiving a commission for these activities. The revenue authorities discovered this during a visit to the appellant's premises. Upon realizing their liability, the appellant voluntarily discharged the entire service tax along with interest before any show-cause notice was issued.

The appellant argued that they had already paid the service tax liability with interest before the show-cause notice was issued. The appellant contended that the penalty imposed under Section 78 should be set aside. On the other hand, the Departmental Representative argued that as a public sector undertaking, the appellant should have discharged the service tax liability from the beginning, justifying the penalty imposition.

The Tribunal, after considering the facts, held that the appellant, by voluntarily discharging the service tax liability and interest upon being pointed out by the officers, was eligible for the benefit of Section 73(3) of the Finance Act, 1994. This section provides for non-issuance of a show-cause notice if the assessee pays the service tax liability and interest on their own ascertainment after being pointed out by the officers. The Tribunal noted that the appellant, being a public sector undertaking, may have overlooked the provisions of Business Auxiliary Service but promptly paid the tax amount upon realization. Therefore, the Tribunal concluded that no show-cause notice should have been issued as per Section 73(3) of the Finance Act, 1994.

The Tribunal further held that the penalties imposed under Section 78 should be set aside, as the provisions of Section 73(3) were applicable in this case. Additionally, the Tribunal invoked Section 80 of the Finance Act, 1994, to set aside the penalty imposed by the adjudicating authority. Consequently, the service tax liability and interest were upheld, while the penalty imposed by the adjudicating authority was set aside under the provisions of Section 80 of the Finance Act, 1994.

In conclusion, the appeal was disposed of with the operative part pronounced in court.