SCN is to be issued when the assessee voluntarily deposits service tax with interest belatedly

PJ/Case Laws/2010-11/1028

Case: Jay Shipping v/s Commissioner of C. Ex., Rajkot

Citation: 2010 (20) S.T.R. 774 (Tri. Ahmd)

Issue:- Whether show cause notice is to be issued when the assessee voluntarily deposits service tax with interest belatedly?

Brief Facts:- Appellants had delayed the payment of service tax. The first Appellant had made delayed payment on three quarters, the second Appellant had made delayed payment in four quarters and the third Appellant had delayed the payment for two quarters. In all the cases, service tax was paid with interest and return was also filed in time. Department subsequently issued show cause notices proposing to impose penalty under Section 76 of Finance Act, 1994. The Adjudicating Authority confirmed the penalties under Section 76.

Appellants are challenging the imposition of penalties.

Appellant’s Contention:- Appellants submitted that the issue is no more res integra and covered by several decisions of the Tribunal. They placed reliance on the decisions of the Tribunal in the case of M/s UB Engineering v/s CCE, Rajkot [2009-TIOL-1192-CESTAT-CX-AHM], M/s Amrish Enterprises v. CCE Rajkot [Order No. A/1018/WZB/AH’BAD/2010], M/s. Shanthi Casting Works v. CCE, Coimbatore [2009 (15) STR 219 (Tri-Chennai)] and M/s Electro World v. CCE, Chandigarh [2010 (18) STR 425 (Tri-Del)].

Respondent’s Contentions:- Revenue submitted that the appellants have repeatedly failed to pay service tax in time and that in such cases a lenient view is not called for. Further, they also contended that there was also delay in filling the returns by one of the appellant earlier also.

Reasoning of Judgment:- The Tribunal held that according to provisions of sub-section 3 of Section 73 of Finance Act, 1994, where there is short levy of service tax, if the person chargeable with tax, pays the amount on the basis of own assessment, before service of notice, with interest, Central Excise officers shall not service any notice on him. Reliance was also placed on Board Circular No. F. No. 137/167/2006-CX., dated 3-10-2007 wherein it has been clarified that in respect of persons who voluntarily deposited the tax, no proceedings are required to be initiated.

It was held that in the present case, there is no dispute that the appellants had discharged service tax liability with interest before issue of show cause notice. The judgments cited by the appellant were also relevant. In view of the provisions of Section 73(3) of Finance Act, 1994, and precedent decisions, the Tribunal allowed the appeals.

Judgment:- Appeals allowed.

Comment:- Show cause notice can not be issued if the assessee suo moto paid the duty and interest before the issuance of show cause notice.

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PJ/Case Laws/2010-11/1028

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