No Show Cause Notice if the tax is paid before issuance of the same.

PJ/Case Laws/2012-13/1248

Case: - KISHAN M. MEHTA & CO. VERSUS COMMISSIONER OF SERVICE TAX, AHEMDABAD

Citation: - 2012 (27) S.T.R. 481 (Tri- Ahmd.)

Brief fact: - The Appellant is engaged in providing services as practicing Chartered Accountant. They had defaulted in payment of Service Tax in time during the period from April 2002 to March 2006, but paid the same with interest and on few occasion filed returns also later than due date. On noticing the frequent default by the appellant, Show Cause Notice was issued by the Revenue on 15-01-2007 initiating proceedings for imposing penalty under Section 76 & 78 of Finance Act, 1994.

Appellant Contention: - The Appellant submit that they were paying Service tax quite often in time and whenever there was a delay, it was paid with interest and they were also fairly admitting that the return were filed late on many occasion, he submit that payment of Service Tax, Interest thereof and filing returns was done voluntarily without any reminder from the Department. He further submitted that according to Section 73(3), where there is a short levy of Service Tax, if the person who is liable to pay on the basis of his own or on the basis of ascertainment by Central Excise officers, pays Service Tax and interest before serving of a notice, no Show Cause Notice will be issued. He also drew my attention to the C.B.E. & C. Circular No. 137/167/2006-CX.4, dated 3-10-2007, wherein the Board has clarified that if the assessee pays Service Tax with interest before issue of Show Cause Notice, no further proceedings will be initiated. It was also clarified that the conclusion of proceedings in terms of sub-section of Section 73 of Finance Act, 1994 implies conclusion of entire proceedings under Finance Act, 1994 (the Act).

Respondent Contention:- The Ld. A.R. for the Revenue submits that the assessee is a frequent defaulter and being a Chartered Accountant, he is expected to follow the law properly and therefore deserves to be visited with penalty under Sections 76 and 77 of Finance Act, 1994.

Reasoning of Judgment: The Tribunal Held that the circular issued by the Board clearly provides that there can be no proceedings under Finance Act, 1994 at all when the assessee is eligible for benefit of provisions of Section 73(3) of Finance Act, 1994. Further, there are several decisions of the Tribunal wherein, a similar view has been taken. Tribunal find that such a view has been taken in the case of Auto Transport Services v. C.C.E., Jaipur-11 - (2006) 5 SI-I 396 (New Delhi-CESTAT) 2006 (3) S.T.R. 330 (Tribunal). Since the issue is covered by the precedent Tribunal's decision cited above and Board's circular discussed above and also since the issue is covered by provisions of Section 73(3) of Finance Act, 1994, no Show Cause Notice should have been issued and no proceedings should have been initiated. Therefore, the impugned order is set aside and the appeal is allowed with consequential relief.

Decision:- Appeal Allowed

Comments :- Show cause notice need not to be issued when the tax is paid before issuance of show cause notice. This provision is clearly contained in Section 73(3) of the Act but the department does not agree the same as issue show cause notice invariably.

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PJ/Case Laws/2012-13/1248

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