2011 (2) TMI 540

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..... nst the penalties imposed on them - Decided in favor of the assessee by way of direction to deposit Rs. 20 Lakhs
S/Shri P.G. Chacko , Sahab Singh, JJ. REPRESENTED BY : Shri Vinay Bhushan, Consultant, for the Appellant. Shri R.K. Mahajan, Jt. CDR, for the Respondent. [Order per : P.G. Chacko, Member (J)]. - In this application, the appellant seeks waiver of pre-deposit and stay of recovery in respect of penalties imposed on them, a penalty of Rs. 80 lakhs under Section 78 of the Finance Act, 1994, another penalty of Rs. 1000 under Section 77 of the Finance Act, 1994 and yet another penalty under Section 76 of the Act. The Commissioner of Service Tax, in adjudication of a show-cause notice, confirmed demand of service tax amounting to .....

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..... has also argued that the appellant should get the benefit of sub-section (3) of Section 73 of the Finance Act, 1994 inasmuch as they voluntarily paid the service tax with interest. 3. The learned Jt. CDR submits that the appellant duly collected the service tax from their customers but did not remit the same to the exchequer. He submits that this default was noticed by the department sometime in July 2007 and investigations were launched by DGCEI forthwith. Faced with this situation, the appellant was constrained to pay the amount of service tax with interest thereon in October 2007. It was not a voluntary payment as claimed by the consultant. The appellant also did not file any return during the period of dispute. Section 73(3) of th .....

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..... nly when investigations were launched by DGCEI. As such, payment of service tax with interest cannot be considered to be 'voluntary payment' for purpose of Section 73(3) of the Finance Act. Moreover, the appellant cannot claim exoneration from penal liability solely on the basis that they paid service tax with interest prior to issue of show-cause notice. The decisions cited by the learned Jt. CDR lend support to this view. Prima facie, the appellant has no case against the penalties imposed on them. The main penalty on them is under Section 78 of the Finance Act and the same amounts to Rs. 80 lakhs. In a reasonable approach, we direct the appellant to pre-deposit a sum of Rs. Twenty lakhs within four weeks and report compliance on 8-4-2011 .....

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