Service Tax with Interest paid – SCN for imposing penalty issued after 1 year

PJ/Case Laws/2011-12/1439

Service Tax with Interest paid – SCN for imposing penalty issued after 1 year – not sustainable

Case: M/s AMIRAS ENTERPRISES Vs CC E, RAJKOT

Citation: 2010-TIOL-1236-CESTAT-AHM

Issue:- Service Tax with Interest paid – SCN for imposing penalty issued after 1 year – not sustainable – case falling under Section 73 (3) – Section 80 invokable.

Brief Facts:- Appellants are engaged in providing manpower recruitment service. The service tax for the period from October 2006 to March 2007 was paid on 13.07.07 with interest and for the period from April 2007 to September 2007 the service tax was paid on 18.10.07 with interest.

Department issued show cause notice to the appellants initiating penal proceedings on 11.06.08. Penalty under Section 76 was imposed by the Original Authority.

Against the imposition of penalty, appeal is before the Tribunal.

Appellant’s Contention:- Appellant contended that as per the provisions of Section 73(3) of Finance Act, 1994, when the assessee has paid the service tax with interest before issue of show cause notice, no show cause notice shall be issued by the central excise authorities. Therefore Appellant submits that the proceedings initiated against the appellants should not have been initiated at all in the first place. Further Appellant also relies upon the decisions of the Tribunal in similar circumstances, wherein the Tribunal took a view that penalty imposed under Section 76 cannot be sustained and held that assessee met the requirement of Section 73(3) of the Finance Act, 1994. The cases cited by him are:

- U.B. Engineering Ltd. Vs. CCE Rajkot [2009-TIOL-1192-CESTAT-AHM]

- Santhi Casting Works Vs. CCE Coimbatore [2009-TIOL-161-CESTAT-MAD]

- Electro World Vs. CCE, Chandigarh [2010-TIOL-520-CESTAT-DEL]

- CCE Vs. Shree Khodiyar Security Guard & Supplying Services [2009 (19_ STT 200 (Ahd-CESTAT)]

- CCE, Vs. Gurunanak Cold Drinks [2005-TIOL-1147-CESTAT-DEL]

Appellant also relies on the Circular issued by the Board as on 03.10.2007 stating that where the service tax and interest have been deposited further proceedings need not to be taken up.

Appellant also submitted that the appellant is a proprietary concern and they provide manpower service to only one company and the nearest bank to the appellant is 60 KM away and he requests taking all these factors into consideration a lenient view u/s 80 of the Finance Act, 1994 is also called for.

Reasoning of Judgment:- The Tribunal held that all the precedent decisions cited by Appellant support their case. In Appellant’s case the show cause notice was issued after one year and that too after the assessee had already paid the service tax with interest. Therefore the assessee is clearly covered by the provisions of Section 73(3) was of Finance Act, 1994. Further, it was held that under the circumstances, this is also a fit case for lenient view by applying the provisions of Section 80 of Finance Act, 1994.

Decision:- Appeal allowed.

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PJ/Case Laws/2011-12/1439

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