2020 (7) TMI 587 - AT - Service Tax

Imposition of penalties - Mining of Mineral services - tax along with interest paid on being pointed out before issuance of SCN - period 2007-08 and 2008-09 - HELD THAT - The issue is no more res integra and has been settled in favour of the assessee that once the assessee pays the tax along with applicable interest before issuance of the show-cause notice, the show-cause notice should not have been issued in the facts of the present case. The case of the appellant is squarely covered by Section 73(3) of the Finance Act, 1994 since the appellant assessee after making payment of service tax and the applicable interest before issuance of the show-cause notice, intimated the authorities for not issuing the show-cause notice. Once the payment of service tax and interest is made by the appellant assessee and the intimation is furnished to the authorities, then the authorities should not serve any notice under sub-section (3) of Section 73 in respect of amounts already paid - there was no case to initiate proceedings for imposition of penalties under various sections of the Act. The appellant is not liable to pay penalty. Extending the benefit of Section of 80 of the Finance Act, 1994, the penalties and late fines are set aside in entirety - appellant s liability to pay service tax and interest amount is upheld which already stands paid, is upheld - appeal allowed in part.

Summary

Issues Involved:
Alleged failure to discharge service tax on "Mining of Mineral services" for the period 2007-08 and 2008-09, demand of service tax, interest, and penalties under various sections of the Finance Act, 1994, appropriating service tax and interest paid, imposition of penalties for evasion of service tax, failure to obtain Service Tax Registration, and failure to file ST3 returns.

Analysis:

1. The adjudicating authority held that the services provided by the appellant in mining activities were taxable under the category of "Mining of Mineral" services. The authority confirmed the demand of service tax, interest, and penalties under relevant sections of the Finance Act, 1994.

2. The appellant argued that they paid the service tax and interest before the show-cause notice was issued, indicating no intention to evade payment. They believed the activity was not taxable and would have collected the tax from the recipient if aware. They presented various decisions in support of their arguments.

3. The department representative supported the order and referred to a High Court decision to justify their stance.

4. The Tribunal noted that the appellant had paid the entire service tax and interest before the show-cause notice, citing Section 73(3) of the Finance Act, 1994. They referenced previous court decisions supporting the appellant's position.

5. The Tribunal found no deliberate non-payment of tax by the appellant, distinguishing the case from the High Court decision cited by the department. They emphasized that the service recipient could have claimed a refund, indicating no intent to evade tax.

6. Considering the above discussion and precedents, the Tribunal concluded that the appellant was not liable to pay penalties. They set aside penalties and late fees, upholding the payment of service tax and interest. The impugned order was modified accordingly, and the appeal was partly allowed.

This detailed analysis covers the issues raised in the legal judgment, highlighting the arguments presented by both parties and the Tribunal's reasoning in arriving at the final decision.