hether penalty should be imposed under theFinance Act, 1994 if the assessee had paid Service Tax and interest before the issue of show cause notice?

PJ/Case Laws/2011-12/1125

Prepared By:
CA. Rajani Thanvi &
Kavita Thanvi

Case: CAUVERY TRAVEL LINKS v/sCOMMISSIONER OF SERVICE TAX, BANGALORE

Citation: 2011 (21) S.T.R. 207 (Tri. - Bang.)

Issue:- Whether penalty should be imposed under theFinance Act, 1994 if the assessee had paid Service Tax and interest before the issue of show cause notice?

Brief Facts:- The appellant in this situation have been paid service tax along with interest thereon. The adjudicating authority while confirming the demand for service tax, waived penalty under sections 76, 77 and 78 of the Finance Act, 1994. The commissioner took up review of the order of adjudicating authority and has taken a view that once extended period was invoked, suppression of facts with intention to evade duty is said to be established and in such a case the original adjudicating authority should not have waived the penalty under section 80 of the Finance Act, 1994.

Respondent’s contentions: The respondent argued thatpayment of cash before the issue of show cause notice cannot be a ground for waiver of penalty. Further they contended that if the details were not furnished with the department, penalty under section 77 was to be imposed. They relied upon the Circular issued by the Board vide F. No. 137/167/2006-CX-4, dated 3-10-2007 to support her contention that penalty to the extent of 25% was required to be paid in terms of provisions of Section 73. Further they also relied upon the following two decisions to support their contention:-

ACME Tele Power Pvt. Ltd.v. CCE, Chandigarh - 2008 (10) S.T.R. 416 (Tri.-Del.)

(ii) Insurance & Provident Fund Department v. CCE, Jaipur - 2006 (2) S.T.R. 369 (Tri.-Del.) = 2001 (132) E.L.T. 726 (Tri.-Del.)
They also relied upon the Circular issued by the Board vide F. No. 137/167/2006-CX-4, dated 3-10-2007 to support her contention that penalty to the extent of 25% was required to be paid in terms of provisions of Section 73.
.

Reasoning of Judgment:- The Hon’ble Tribunal found that in this case the appellant had paid Service tax and interest before the issue of show cause notice. Till then they did not pay the Service Tax, since they were advised by Cab Operators Association that the association was pursuing the matter and they should wait. when the Service Tax was proposed to be levied on rent-a-cab service, the appellants did not register themselves and pay Service Tax in view of the advice given by their association.Veryfact that Section 80 of the Finance Act does not exclude cases of evasion of Service Tax by suppression, mis-statement etc. invoking extended period for the purpose of waiving penalty would show that it will not be necessary that in every case where the demand for Service Tax has been confirmed, penalty has to be imposed if extended period has been invoked.

Decision: - The appeal was allowed.

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PJ/Case Laws/2011-12/1125

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