Whether Section 80 can be invoked if service tax liability is discharged before issuance of SCN?

PJ/Case Laws/2012-13/1478

Case:- COMMISSIONER OF CENTRAL EXCISE, RAJKOT V/S M/s JAI KISHAN ENGINEERS

Citation:- 2013-TIOL-485-CESTAT-AHM

Brief Facts: - The Revenue filed this appeal against Order-in-Appeal No.41/2011/COMMR (A)/CMC/RAJ, Dated.9.3.2011. The respondent is neither present nor is there any request for adjournment. Since the issue involved in this case lies in narrow compass, the appeal is for disposal in the absence of any representation from the respondent. The issue involved in this case is regarding non-imposition of penalty under Section 76 of Finance Act, 1994, invoking provisions of Section 80 of Finance Act, 1994 by taking a lenient view. Revenue is aggrieved by such an order on the ground that the appellant did not give any reasonable cause for setting aside the proposition of penalty under Section 76 of Finance Act, 1994 on the ground that the assessee had been registered with the Department and was paying tax on regular basis but for the period April 2008 to September 2008, short paid the amount of Service Tax under various services and penalty should have been imposed under Section 76 of Finance Act, 1994.

Appellant’s Contention: - The appellant contended that the value of taxable services were shown in the returns after discharging the same before issuance of the show cause notices does not mean that it was the reasonable cause.

Reasoning of Judgment: - The Hon’ble CESTAT held that there is no dispute that the respondent herein had short paid the Service Tax before issuance of show cause notice along with interest. The justification which has been given by the assessee has been accepted by both the lower authorities and there are concurrent findings that there is no intention to evade Service Tax liability. Further they find that both the lower authorities have relied upon various decisions and one of them is Kalamna Market Urben - 2010 (20) STR 205 (Tri-Mum.) and in the case of Singla finance Services - 2010 (20) STR 642 (Tri-Del.) = (2010-TIOL-1224-CESTAT-DEL), the ratio of which is that if Service Tax liability is discharged before issuance of show cause notice, the provision of Section 80 can be brought into play and penalty can be waived. Thus, they do not find any reason to interfere in such a well reasoned order by first appellate authority. Hence, they held that the impugned order is correct, legal and does not suffer from any infirmity.

Decision: - Revenue’s appeal was rejected.

Comment:-It can be concluded from this case that when demand along with interest is paid by the assessee before issue of the show cause notice, it indicates the bonafides of the assessee and penalty can be waived by invoking the provisions of section 80.

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PJ/Case Laws/2012-13/1478

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