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TMI Blog2014 (8) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... t and training to corporate, especially with respect to SAP. They were under the bona fide belief that training in relation to SAP was not taxable. They thought that there was an exemption for 'vocational training services'. However, the Department investigated the issue. The party paid the entire amount of service tax along with interest in order to avoid litigation, though there was confusion with regard to their liability. The show-cause notice was issued and service tax was demanded with interest. Penalties under sections 76, 77 and 78 were imposed. The Commissioner (A) made the following observations: 'It is also the case of the Department that the appellant had collected such service tax amounts from the clients but not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39; would also include training of personnel. In spite of the same, the entire amount demanded was paid during the investigation in order to avoid litigation. When there is no levy of service tax itself in terms of the above decision, the question of penalty does not arise. The entire demand of service tax requires to be set aside and the amount of service tax and interest already paid requires to be refunded. Even assuming but not admitting that the activity was taxable, it is on record as noted in both the orders that there was no intention to evade the payment of service tax and it was only due to ignorance of law and other difficulties. Attention was invited to the provisions of section 73(3) of the Finance Act, which is reproduced he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is ground also, the impugned order needs to be set aside. When the assessee acts with the bona fide belief, there cannot be any intention to evade duty and penalty cannot be levied. The following case laws were relied on: (i) Hindustan Steel Ltd. v. State of Orissa [1970] 25 STC 211 (SC); [1972] 83 ITR 26 (SC); [1978] 2 ELT (J159) (SC). (ii) Akbar Badruddin Jiwani v. Collector [1990] 47 ELT 161 (SC). (iii) Tamil Nadu Housing Board v. Collector [1994] 74 ELT 9 (SC). There is sufficient justification for waiver of penalties in terms of section 80 of the Finance Act, 1994. There are number of decisions to say that no interest and penalty are imposable when the tax is paid before the issue of show-cause notice. The following cases were rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest is leviable. Thus, the appeal of the party is allowed. In view of the above order allowing the party's appeal, the Revenue's appeal for imposition of penalty under section 76 has become infructuous. The Revenue's appeal is dismissed." [Against this decision the Revenue filed appeals before the Karnataka High Court.] CEA No. 101 of 2009. B. Pramod for the appellant. The judgment of the court was delivered by N. KUMAR J.-This appeal is by the Revenue challenging the order passed by the Tribunal, which has held that the assessee has paid the service tax and interest even before the issue of show-cause notice, and therefore in view of section 73(3) of the Finance Act, 1994 no penalty could be levied. Aggrieved by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Central Excise Officer before service of notice on him under sub-section (1) in respect of such service tax, and inform the Central Excise Officers of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the amount so paid. Therefore, it is clear before the issue of show-cause notice the assessee acknowledges the leviability to pay the entire service tax due with interest and pays the same; then the authorities are precluded from issue of show-cause notice. In these circumstances, the order passed by the Tribunal is strictly in accordance with the aforesaid statutory provision and does not suffer from any legal infirmity which calls for interference. No merit. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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