ST - s 73(3) - Amount of tax paid along with interest before issuance of SCN - When SCN itself should not have been issued there is no question of imposing any penalty - Penalties imposed under Ss 76, 77, 78 set aside & appeal allowed: CESTAT
By TIOL News Service
MUMBAI, NOV 17, 2015: THE appellant is engaged in the ‘Repair and maintenance of roads' and ‘Survey and Map making' services.
On intelligence that the appellant was not paying service tax on the said taxable services, their premises were visited and some incriminating documents were recovered.
Subsequently, a ST demand of Rs.15,88,251/- came to be issued and adjudicated resulting in confirmation of demand and imposition of penalties under Sections 76, 77 and 78 of the FA, 1994.
The appellant went in appeal before the Commissioner(A) and submitted that the Service tax demand was paid by them along with interest immediately on being pointed out by the department&before issuance of the SCN and, therefore, imposition of penalties was not in order.
The Commissioner(A) looked the other way and, therefore, the appellant is before the CESTAT.
It is submitted that apart from the fact that they have paid the Service Tax demanded under the two categories along with interest before issuance of SCN, the demand on ‘Repair and Maintenance of road' is not sustainable as in Finance Act, 2012 under Section 97, management, repair and maintenance of roads service has been exempted retrospectively for the period 16 June 2005 - 26 July 2009, however, they do not contest the said tax liability and do not press for any refund. Inasmuch as since the tax demand under the said head was not maintainable, penalty should not have been imposed by the Commissioner(A) in his order dated 19/03/2013. Furthermore, as regard survey and map making services, there is no suppression or malafide intention on their part to evade payment of service tax as the transactions have been recorded in their books of account and on being pointed out, tax liability has been discharged alongwith interest and, therefore, their case is squarely covered under Section 73(3) of Finance Act, 1994 i.e no SCN should have been issued/penalties imposed.
The AR fairly agreed in the matter of non-maintainability of penalty in respect of the retrospectively exempted services but in respect of the services of ‘Survey and Map making' stuck to the departmental stand.
The Bench observed –
++ As regard penalty commensurate to the service tax of management, maintenance or repair of roads the service tax liability was not maintainable in view of the retrospective amendment made under Section 97 of the Finance Act, 2012. For this reason itself appellant is not liable for any penalty, therefore penalty under Section 76, 77 and 78 are dropped.
++ As regard penalty related to service of survey and map making service, I found that there is force in the argument of Ld. Counsel that transaction were recorded in their books of account, therefore they had no intention to evade service tax. Moreover, immediately on pointed out by the department, payment of service tax alongwith interest was admittedly made by the appellant and there is no contest thereon, they have made out fit case for waiver of penalty under Section 73(3) …
++ In view of Section 73(3), it is clear that either by the assessee or by the department, service tax is ascertained and paid voluntarily without any contest and intimated to the department the department should not issue the show cause notice.
++ When the show cause notice itself should not have been issued there is no question of imposing any penalty.
The penalties imposed under Section 76, 77 and 78 were set aside, however, demand of Service tax on both the services confirmed by the lower authority and admittedly paid by the appellant was maintained.
The appeal was allowed.
(See 2015-TIOL-2435-CESTAT-MUM)
