Imposition of Penalty under Section 76 - when Service Tax with interest paid before SCN

PJ/Case Laws/2011-12/1514

Case: Saumya Mining Pvt. Ltd. V/s Commissioner of Central Excise, Bhopal

Citation: 2012 (25) S.T.R. 150 (Tri.- Del.)

Issue:- Whether penalty imposed under Section 76 for delayed payment of service tax when assessee deposited the tax along with interest before issuance show cause notice and no fraud or willful intention?

Brief Facts:- The appellant is holder of service tax registration for providing the services of removal of over-burden from the coal mines, which is taxable as "Site Formation and Clearance, Excavation and Earthmoving and Demolition Ser-vices" as defined in Section 65(105)(zzza) of the Finance Act, 1994. During the period 2007-2008, they had paid service tax to the tune of around Rs. 59 Lakhs. They were issued a show cause notice dated 20-10-2009 alleging that during the period April, 2008 to March, 2009, they have paid service tax to the extent of the Cenvat credit available with them and remaining amount of service tax, which was liable to be paid in cash, was delayed from 1 to 6 months from the respective due dates. Accordingly, they were called upon the show cause as to why penalties should not be imposed upon them.

The appellants deposited the said tax along with interest before serving the show cause notice and had submitted month-wise and challan-wise details to the Revenue.

Appellant’s Contention:- Appellant submitted that they have deposited the tax and interest before the service of the said show cause notice, the issue of the notice was not called for. They relied upon the various decisions of the Tribunal as also on the Letter No. F. No. 1371/67/2006-CX.4, dated 3-10- 2007 which is to the effect that where service tax is paid suo motu by the assessee, the show cause notice is not called for.

Reasoning of Judgment:- The provisions of Section 73(3) of the Finance Act, 1994 is to the effect that where the service tax along with interest stand paid by the assessee before issuance of the show cause notice and no fraud or willful intention on their part is available, no further proceedings would be initiated.

In this case entire service tax and interest stand paid by the appellant before issuance of the show cause notice and no mala fide stands attributed to them, the issuance of the show cause notice for imposition of penalty under Section 76 was not called for. To the same effect is the decision of the Tribunal in the case of Commissioner of Central Excise, Vishakhapattanam v. Sri Koduri Enterprises Pvt. Ltd. reported in 2010 (18) S.T.R. 512 (Tribunal-Bang.). Penalty set aside

Decision:- Appeal allowed.

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