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2017 (10) TMI 562 - HC - Service TaxLevy of penalty at reduced rate of 25% of tax - Principles of Natural Justice - The appellant stated that the service tax and interest had been deposited prior to issuance of Show Cause Notice and Adjudication Order; the penalty under Sections 76 and 77 of the Finance Act is not mandatory Whether the Show Cause Notice dated 29.09.2010 and the Order-in-Original dated 04.05.2012, wherein the Additional Commissioner reduced the penalty to 25% of the imposed penalty of ₹ 13,36,869/-, if the same is paid within 30 days, which came to be confirmed by the order impugned in the present appeal, are sustainable? Held that: - the appellant had contravened the provisions of Section 68 of the Finance Act, 1994, read with Rule 6(1) of the Service Tax Rules, 1994 and short- paid the interest for the earlier period also. The appellant has collected the tax amount from their customers, but had not paid the same to the Government Exchequer and only after pointing out by the Audit authorities, they have paid Service Tax vide five challans dated 31.12.2009, 06.01.2010, 07.01.2010, 01.01.2010 and 19.02.2010 along with ₹ 1,72,273/- towards interest and a sum of ₹ 71,566/- through utilization of CENVAT Credit towards their service tax dues - Moreover, though the appellant has collected the service charges along with the service tax amount during the period April 2008 to December 2009, appellant had not deposited such service tax into the Government Exchequer in time nor had intimated the department the details of such receipts in their ST3 Returns filed during the material period, which is not disputed by the appellant herein. Therefore, the appellant has contravened Section 70 of the Finance Act,1994 read with Rule 7 of Service Tax Rules, 1994 - the appellant has intentionally suppressed the service tax collected from its customers and failed to remit the same in the Central Government's Account for the period 2008-09, with an intention to evade payment of tax. In the Order-in-Original, the Additional Commissioner, only on the fact that the appellant herein have made payments during different periods within a span of four months that too, after the audit conducted by the Officers of the Internal Audit, Commissionerate of Chennai, had taken a lenient view by reducing the penalty to 25% of the imposed penalty amount of ₹ 13,36,869/- if the same is paid within 30 days. The Additional Commissioner has used his discretionary power, which he is empowered under Section 78 of the Act - The reduction of penalty from the original amount to 25% is not contrary to Section 78 and hence, it is valid. The appellant is directed to remit 25% of ₹ 13,36,869/- within 30 days from the date of receipt of this order, failing which interest of 12% p.a should be levied till the date of payment - petition dismissed.
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