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2023 (8) TMI 12 - CESTAT MUMBAILevy of penalty u/s penalty u/s 77 and Section 78 of Finance Act, 1994 - service tax paid before issue of show cause notice - suppression of facts or not - applicability of provisions of subsection (3) of Section 73 of Finance Act, 1994 - HELD THAT:- The appellant had paid the entire service tax ascertained by them before issue of show cause notice. He had also paid interest of Rs. 23,39,370/- voluntarily before issue of show cause notice. It is found from the said sub-section (3) of Section 73 ibid that if the service provider, on the basis of its own ascertainment, pays service tax before issue of show cause notice, then Revenue cannot issue show cause notice. The said provision is not applicable only if the non-payment of service tax is on account of collusion, misstatement, suppression of fact with intention to evade payment of duty - in the present case, Revenue has invoked proviso to sub-section (1) of Section 73 of Finance Act, 1994 for raising demand for the larger period from 01.07.2010 to 31.03.2016 by issue of show cause notice on 27.04.2017. However, for invocation of extended period and for making inoperative the said provisions of subsection (3) of Section 74 ibid, there are dual criteria of collusion, misstatement, suppression of fact and intention to evade duty. In the present case, the appellant has paid the entire service tax before issue of show cause notice. Therefore, intention to evade service tax is absent in the present case. Therefore, there was no case for issue of show cause notice and, therefore, there would not have been occasion to propose imposition of penalty. Had there been no occasion to issue show cause notice, there could not have been occasion to impose penalty - the imposition of penalty under Section 77 and Section 78 of Finance Act, 1994 is not sustainable in the present case. The impugned order modified by setting aside penalties imposed on the appellant under Section 77 and Section 78 of Finance Act, 1994 - appeal allowed.
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