2011 (11) TMI 172 - AT - Service Tax

Waiver of penalty imposed under Section 76 & 78 Finance Act 1994 - default in payment of service tax in time service tax paid with interest - few returns also filed after due date Held that - Board circular no. CBE&C circular No.137/167/2006-CX.4 dt.3.10.07 clarifies that if the assessee pays Service Tax with interest before issue of Show Cause Notice no further proceedings will be initiated. Since the issue is covered by the Tribunal decisions 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.

Summary

Issues:
1. Imposition of penalty under Section 76 & 78 of Finance Act, 1994 for delayed payment of Service Tax and late filing of returns.
2. Interpretation of Section 73(3) of Finance Act, 1994 in relation to the issuance of Show Cause Notice.

Analysis:
1. The appellant, a practicing Chartered Accountant, faced a Show Cause Notice from the Revenue for frequent defaults in paying Service Tax on time and late filing of returns from April 2002 to March 2006. The appellant argued that despite occasional delays, they paid the tax with interest voluntarily and without any reminders. The appellant's representative contended that as per Section 73(3) of the Finance Act, 1994, no Show Cause Notice should have been issued if the tax and interest were paid before receiving a notice. Reference was made to a circular by the Board supporting this interpretation. The Revenue, however, argued for imposing penalties under Sections 76 and 77 due to the appellant's repeated defaults, considering the appellant's profession as a Chartered Accountant.

2. The Tribunal analyzed the submissions and found that while there were instances of delayed payments and late filings, there was no suppression of facts or misdeclaration. The amount paid was accurate, and no additional tax was due. The Commissioner (Appeals) had initiated proceedings under Sections 68 and 70 of the Act for delayed payments and late filings, not under Section 73(3). The Tribunal referred to the Board's circular and previous decisions supporting the appellant's argument. Citing the precedent set in the case of Auto Transport Services Vs CCE Jaipur-II, the Tribunal concluded that since the issue fell under Section 73(3) and was covered by previous decisions and the Board's circular, the Show Cause Notice should not have been issued. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief.