2017 (11) TMI 1401 - AT - Service Tax

Penalty u/s 76 and 78 - in a case where the assessee has paid entire amount of service tax along with interest and 25 % of service tax as penalty within 3 days of the issuance of the show cause notice, whether the proceedings can be concluded under Section 73(3) of the Finance Act, 1994 or not? - Held that - it is a clear mandate of law that if a assessee paid entire amount of service tax alongwith interest and 25% of service tax as penalty within 30 days of the issuance of the show cause notice the proceedings shall be concluded - As appellant has compiled with the provisions, therefore, proceedings against the appellant is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against imposition of penalty under Section 76 & 78 of the Finance Act 1994.
- Interpretation of Section 73(3) regarding payment of service tax, interest, and penalty within 30 days of show cause notice issuance.

Analysis:
The appellant appealed against an order imposing penalties under Sections 76 & 78 of the Finance Act 1994. The appellant had paid the entire service tax amount, interest, and 25% penalty within 30 days of receiving the show cause notice. Despite this, a new show cause notice was issued to appropriate the amount and impose additional penalties. The issue at hand was whether the proceedings could be concluded under Section 73(3) of the Finance Act in such a scenario. The presiding member, Mr. Ashok Jindal, noted that as per the law, if the assessee pays the full service tax, interest, and 25% penalty within 30 days of the show cause notice, the proceedings should be concluded. However, both lower authorities had failed to adhere to this legal mandate and continued proceedings against the appellant. The presiding member highlighted a previous High Court decision stating that penalties under Section 76 & 78 cannot be imposed simultaneously if the appellant has already paid 25% service tax as a penalty.

In light of the above, the presiding member found that the proceedings against the appellant were not sustainable and set them aside. The appeal was allowed, granting relief to the appellant. The judgment emphasized the importance of complying with the legal provisions and criticized the lower authorities for not following the clear mandate of the law.