Service tax with interest paid before issuance of SCN - there was no requirement of issuing SCN

PJ/Case Laws/2012-13/1058

Case: SARASWATI ENGINEERING Versus COMMR. OF CUS. C. EX. & S.T., NAGPUR

Citation: 2011 (24) S.T.R. 298 (Tri. - Mumbai)

Issue:- When service tax with interest is paid before issuance of SCN voluntarily then no SCN should be issued.

Brief Facts:- Appellant is a small-scale contractor engaged in providing Maintenance and Repair Services and holds Service Tax Registration. During the period from April to September, 2007 appellant provided the said services to M/s. Manikgarh Cement. The value of the taxable service so provided amounted to Rs. 19,11,058/-. The service tax payable thereon amounted to Rs. 1, 98,724/-. The appellant collected service tax from the recipient of the service but did not remit the same immediately to the credit of the Revenue. The appellant paid an amount of Rs. 83,820/- towards service tax on 21-8-2007 and paid the balance amount of Rs. 1,14,904/- on 5-5-2008. The appellant also discharged the interest amount of Rs. 10,049/- for the late payment of service tax. The appellant filed the service tax return for the said period on 9-5-2008 after a lapse of about 6 months and was directed to pay the late fee of Rs. 2,000/- for the delayed filing, which was also paid by the appellant.

The jurisdictional Assistant Commissioner issued a show-cause notice alleging non-payment of service tax for the said period and also proposing imposition of penalties under Sections 76, 77 and 78 of the Finance Act, 1994. The appellant did not file any reply to the show-cause notice.

Therefore, the Adjudicating Authority passed an ex-parte order dated 30-3-2009 wherein he confirmed the service tax amount of Rs. 1,98,724/-, interest on the said amount under Section 75 and imposed an equivalent amount of penalty both under Section 76 and under Section 78 of the Finance Act, 1994 and a further penalty of Rs. 1,000/- under Section 77.

Appellant is in appeal before the Tribunal.

Appellant’s Contention:- Appellant submits that in spite of the submissions made before the Lower Appellate Authority that in view of the provisions of sub-section (3) of Section 73, no notice could have been issued on the appellant and no penalty could have been imposed, the Lower Appellate Authority did not consider this plea and merely confirmed the order of the lower Adjudicating Authority. When the show-cause notice itself is not maintainable in view of the above provisions of law, the orders of the Adjudicating and Appellate Authorities are bad in law and not sustainable.

Respondent’s Contention:- Revenue reiterates the findings given by the lower authorities. However, they fairly concedes that the appellate authority has not given any finding on the pleas made by the appellant and, therefore, the matter be sent back to the lower appellate authority for reconsideration.

Reasoning of Judgment:- The Tribunal noted that from the records it is seen that the appellant had discharged the service tax liability of Rs. 1,98,724/- along with interest thereon well before the issue of show-cause notice. They had also paid the late fee of Rs. 2,000/- for the delayed filing of the service tax return.

The Tribunal perused the provisions of Section 73 and noted that a plain reading of the Section 73 makes it abundantly clear that if the assessee has discharged the service tax liability on his own ascertainment or on the basis of ascertainment by the Central Excise officers and informed the Central Excise officer of payment of such service tax then, no notice under sub-section (1) in respect of the amount so paid shall be served. In the instant case, the assessee discharged the tax liability for the period April to September, 2007 in August 2007 and May 2008. Interest amounting to Rs. 10,049/- was paid on 5-5-2008. They had filed the return due on 25-10-2007 by 9-5-2008. They also paid the late fee of Rs. 2,000/- for the delayed filing of the return as per the instructions of the officer who received the return. The above conduct of the assessee makes it abundantly clear that there was no willful mis-statement or suppression of fact on the part of the assessee. Therefore, the provisions of subsection (3) of Section 73 is clearly attracted in the facts of the case and issuance of a show-cause notice for demand of service tax and imposition of penalties was not at all warranted.

Appellant is only challenging the imposition of penalties and not any other amount paid. In view of the above legal provisions Tribunal held that the imposition of penalties under Sections 76, 77 and 78 in this case was not at all warranted. Order is set aside.

Decision:- Appeal allowed accordingly.

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PJ/Case Laws/2012-13/1058

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