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2023 (12) TMI 377 - CESTAT CHENNAILevy of 15% penalty - suppression of facts - period April 2015 to June 2017 - royalty payment under reverse charge mechanism - HELD THAT:- There is no finding rendered in the order passed by the adjudicating authority in this regard. It is merely stated in the order that the appellant has paid the service tax along with interest and 15% penalty on 28.12.2020 (a day before issue of show cause notice). It is therefore concluded by adjudicating authority that it is voluntary payment made by the appellant. The facts show that the appellant has paid the service tax of Rs.3,95,743/- immediately on being pointed out by ECM. The SCN has been issued one day after payment of service tax. The original authority has confirmed the penalty of 15% observing that appellant has voluntarily paid the 15% penalty. When the appellant submitted their reply as well as contested the matter, it cannot be said that they do not dispute the imposition of penalty. There is no finding rendered with regard to the reasons for confirmation of penalty under Section 78 of the Finance Act 1994. Further, the service tax along with interest has been paid before issuance of SCN. The penalty of 15% imposed on Rs.3,95,743/- requires to be set aside - the confirmation of demand of Rs.3,95,743/- along with interest is not disturbed and only the penalty of 15% on this amount is set aside. Refund being 15% penalty - HELD THAT:- The adjudicating authority vide OIO dt. 15.4.2021 held that no penalty is required to be imposed under Section 78 in respect of Rs.25,04,156/- for the reason that when the audit pointed out that the amount of service tax to be paid on the royalty is Rs.25,04,156/- the appellant has paid the amount with interest. If the audit had informed that the appellant has to pay Rs.28,99,899/- (Rs.25,04,156 + Rs.3,95,743/-) the appellant would have paid the same - The short payment of Rs.3,95,743/- has been pointed out much later after two years. The appellant then paid the same with interest before issuance of SCN. Sub-section (3) of Section 73 provides that no SCN is to be issued when service tax along with interest is paid as pointed out by the officer of the department. In para 21 of OIO, the adjudicating authority has quoted para 8.2.2 of Audit Manual to hold that after payment as per audit objections the settlement is final - this view of the adjudicating authority is agreed upon. The said order has not been challenged by the department and has become final as against the department - as the department has not challenged the order passed by the original authority setting aside the penalty, the department cannot contend in the refund proceedings that penalty set aside is incorrect. The original authority has dropped the 15% penalty on Rs.25,04,156/. Hence Rs.3,75,623/- is eligible for refund. The impugned orders are set aside - Appeal allowed.
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