2018 (5) TMI 1462 - AT - Service Tax

Penalty - the appellant had paid the service tax along with interest prior to the issuance of the show-cause notice - Section 73(3) of the Finance Act, 1994 - Held that - the case of the appellant is squarely covered by Section 73(3) of the Finance Act because after the payment of service tax along with interest before issuance of show-cause notice, he informed the authorities for not issuing the show-cause notice - penalty not warranted - appeal allowed - decided in favor of appellant.

Summary

Issues involved: Appeal against rejection of appeal by Commissioner(Appeals) upholding Order-in-Original for non-payment of service tax, interest, and penalties; Applicability of Section 73(3) of the Finance Act; Interpretation of judicial precedents in similar cases.

Analysis:
1. The appeal was filed against the rejection of the appellant's appeal by the Commissioner(Appeals) who upheld the Order-in-Original due to non-payment of service tax, interest, and penalties. The appellant provided services to a company and received payments without obtaining registration or paying service tax initially. Subsequently, after an audit, the appellant paid the entire tax liability along with interest. A show-cause notice was issued demanding service tax, interest, and penalties. The appellant contended that they had voluntarily paid the tax and interest before the notice was issued, requesting not to proceed further under Section 73(3) of the Finance Act, 1994. The Commissioner(Appeals) rejected the appeal, leading to the present appeal.

2. The appellant argued that the impugned order was legally unsustainable as it failed to consider the provisions of Section 73 of the Finance Act and contradicted binding judicial precedents. The appellant believed that the services provided did not attract service tax initially. Upon realizing their liability, they voluntarily paid the outstanding tax and interest, requesting the authorities not to issue a show-cause notice. The appellant cited several judicial decisions to support their position.

3. The Revenue, represented by the learned AR, contended that the appellant had suppressed facts and was not entitled to the benefits of Section 73(3) of the Finance Act. They argued that the appellant fell under Section 73(4) for suppressing material facts and not registering under Service Tax.

4. The Tribunal, after hearing both sides and reviewing the records, noted that the appellant had indeed paid the service tax and interest before the show-cause notice was issued. The appellant had also informed the authorities about the payment and requested not to proceed further under Section 73(3) of the Finance Act. The Tribunal found that the appellant's case fell within the purview of Section 73(3) and that the cited judicial decisions supported the appellant's position. Consequently, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal.

This detailed analysis of the judgment provides a comprehensive understanding of the legal issues involved and the Tribunal's decision in this case.