2020 (2) TMI 755 - AT - Service Tax

Imposition of penalties in terms of provisions of Sub-section (3) of Section 73 of Finance Act, 1994 - service tax alongwith interest was paid before issuance of SCN - HELD THAT - Under Sub-section (4) of Section 73 of Finance Act, 1994 it is provided that the provisions under Sub-section (3) to said Section 73 are not applicable where non-payment of service tax is on account of suppression of facts. The appellant had not filed ST-3 returns for the impugned period till 20/01/2012 nor paid service tax of ₹ 1.85 crores and the said short payment was detected through an enquiry by Revenue. Therefore, Sub-section 3 of Section 73 of Finance Act, 1994 which empowers conclusion of proceedings of payment of service tax alongwith interest before issuance of show cause notice are not applicable in the present case. There are no infirmity with the impugned order - appeal dismissed - decided against appellant.

Summary

Issues:
1. Non-payment of service tax for a specific period.
2. Applicability of penalties under Section 73 of Finance Act, 1994.
3. Interpretation of Sub-section (3) and (4) of Section 73 in cases of suppression of facts.
4. Comparison with relevant case laws.

Analysis:
1. The case involved a dispute regarding non-payment of service tax by the appellant for the period from April, 2010 to November, 2010, amounting to around &8377; 1.85 crores. The appellant had paid only around &8377; 76 lakhs through Cenvat account during this period, leading to a demand notice issued by the Revenue.

2. The impugned Order-in-Original confirmed the demand raised by the Revenue and imposed penalties under Section 78 and Section 77 of the Finance Act, 1994, amounting to &8377; 1,85,41,395/- and &8377; 3,000/- respectively. The appellant argued that since the service tax along with interest was paid before the show cause notice, the penalties should be set aside as per the provisions of Sub-section (3) of Section 73.

3. The Tribunal considered the submissions from both sides and examined the provisions of Sub-section (3) and (4) of Section 73. It was noted that Sub-section (4) of the Finance Act, 1994 states that Sub-section (3) does not apply in cases of non-payment due to suppression of facts. As the appellant had not filed ST-3 returns or paid the outstanding service tax until after an enquiry was initiated by the Revenue, the Tribunal held that the provisions of Sub-section (3) did not apply in this case.

4. The Tribunal distinguished the case laws cited by the appellant, emphasizing that the payment of service tax in this case was made after the initiation of the enquiry, unlike the cases referred to. The Tribunal also highlighted that the rulings from the Karnataka High Court and another Final Order of the Tribunal were not applicable due to the absence of allegations of suppression in the present case. Consequently, the Tribunal upheld the impugned order, finding no error in its decision.

5. Ultimately, the Tribunal rejected the appeal, affirming the decision of the impugned Order-in-Original. The judgment was dictated and pronounced in open court by the members of the Tribunal.