2022 (2) TMI 1076 - AT - Service Tax

Seeking deletion of penalty imposed under section 78 - entire Service Tax and interest paid before issuance of Show Cause Notice - conclusion of section 73(3) of Finance Act, 1994 - invocation of extended period of limitation - suppression of facts or not - HELD THAT - From section 73(3) of FA, it is clear that assessee is required to inform the department about their intention to avail the benefit of section 73(3) in writing - In the present case, the appellant has not informed the department that they wish to avail the benefit of section 73(3). Moreover, the demand was raised for the period 2011-12 to 2014-15 by invoking the extended period. This itself shows that the appellant has suppressed the fact. It is also observed that the appellant have discharged the Service Tax only when the issue was raised by the audit party at the end of service recipient M/s Balas Industry. The audit report was issued on 16/09/2014 and on this basis only the appellant has paid the amount on 14/10/2016 and 15/10/2016. The appellant has neither taken any registration nor paid the Service Tax for the last 5 years. Therefore, there is a clear suppression of fact on the part of the appellant. Sub-section (4) of the section 73 clearly provides that where nonpayment of Service Tax is due to suppression of fact, misstatement, fraud, collision, etc the case cannot be concluded under section 73(3) - Therefore, in the present case, the appellant have not complied with the provision of section 73(3) and suppression of fact is clearly established against the appellant. Hence, they are not eligible to avail benefit under section 73(3). Accordingly, the Revenue has rightly issued the Show Cause Notice and the Adjudicating Authority has correctly imposed the penalty under section 78. Appeal is dismissed.

Summary

Issues Involved:
Appeal against penalty under section 78 based on payment of Service Tax before Show Cause Notice issuance. Interpretation of section 73(3) of Finance Act, 1994 regarding suppression of facts and imposition of penalty.

Analysis:
The appeal was filed seeking relief from the penalty imposed under section 78 based on payment of the entire Service Tax and interest before the Show Cause Notice was issued. The appellant argued that as per section 73(3) of the Finance Act, 1994, they should not be liable for any penalty. The appellant's representative reiterated that the payment was made well before the issuance of the Show Cause Notice, thus falling under the provisions of section 73(3) which should exempt them from penalty.

The Revenue, represented by the Superintendent, contended that the demand pertained to a period from 2011-2012 to 2014-15, invoking the extended period due to suppression of facts by the appellant. It was highlighted that the Service Tax was only paid after an audit pointed out the non-payment, indicating suppression of facts on the appellant's part. Citing the judgment in a similar case, it was argued that suppression of fact precludes the application of section 73(3) of the Finance Act, 1994.

The Tribunal carefully considered the submissions and records. It was noted that the central issue was whether the appellant's case could be concluded under section 73(3) of the Finance Act, 1994, thereby exempting them from the penalty under section 78. The tribunal referred to section 73, emphasizing the requirement for the assessee to inform the department in writing about their intention to avail the benefits of section 73(3). In this case, the appellant failed to do so, and the demand was raised for an extended period due to suppression of facts, as evidenced by the delayed payment post-audit findings.

The tribunal concluded that the appellant's failure to comply with the provisions of section 73(3) and the established suppression of facts rendered them ineligible for the benefits under that section. Consequently, the Revenue's issuance of the Show Cause Notice and the imposition of the penalty under section 78 were deemed appropriate. The tribunal upheld the impugned order, dismissing the appeal.

In summary, the judgment delved into the interpretation of section 73(3) of the Finance Act, 1994 concerning the implications of suppression of facts on penalty imposition and the eligibility for exemption. The tribunal's detailed analysis emphasized the importance of compliance and timely disclosure, ultimately affirming the penalty imposition based on the established suppression of facts by the appellant.