2017 (4) TMI 503 - HC - Service Tax

Levy of penalty - assessee had discharged the entire liability of payment of service tax and interest thereon before the issuance of show cause notice - Held that - when an assessee had paid the service tax in full together with interest the proceedings against the assessee would be concluded including the proceedings under Section 73(3) of the Finance Act 1994. - Decided in favor of assessee.

Summary

Issues:
Challenge to order imposing penalty on delayed payment of service tax.

Analysis:
The High Court heard a Central Excise Appeal challenging a Customs, Excise and Service Tax Appellate Tribunal's decision setting aside a penalty imposed on the assessee for delayed payment of service tax. The main issue was whether the assessee was liable to pay the penalty despite discharging the entire service tax liability and interest before the show cause notice. The appellant-Department argued for penalty payment based on previous decisions, but the Tribunal's order was upheld. The Tribunal relied on a Circular from the Finance Department clarifying that full payment of service tax and interest concludes proceedings against the assessee. The Tribunal's decision was supported by a judgment from the Bangalore Bench and upheld by the Karnataka High Court. The High Court found no error in the Tribunal's decision and dismissed the Central Excise Appeal as no substantial question of law arose. The judgment emphasized the importance of considering relevant Circulars in such cases.

In conclusion, the High Court upheld the Tribunal's decision, emphasizing the significance of Circulars in determining penalty liability for delayed service tax payment. The judgment highlighted the importance of previous decisions and the relevance of Circulars issued by the Finance Department in concluding proceedings against the assessee upon full payment of service tax and interest. The High Court found no grounds for interference with the Tribunal's order, ultimately dismissing the Central Excise Appeal.