2014 (9) TMI 253 - AT - Service Tax

CESTAT rules no penalty for belated service tax payment due to absence of intent to evade.

M/s. Essar Construction Limited Versus Commissioner of Central Excise & ST., Surat

M/s. Essar Construction Limited Versus Commissioner of Central Excise & ST., Surat - TMI Issues:Imposition of penalty under Section 76 of the Finance Act, 1994 for belated payment of service tax liability.Analysis:Issue 1: Imposition of penalty under Section 76 of the Finance Act, 1994The appellant belatedly paid the service tax liability along with interest, leading to a show cause notice for penalty under Section 76 of the Finance Act, 1994. The appellant argued that the penalty should not be imposed as there was no intention to evade payment, citing judgments from the Hon'ble High Courts of Gujarat and Karnataka. The Tribunal considered the submissions and records, noting that the appellant had discharged the service tax liability on their own. The Tribunal applied Section 73(3) of the Finance Act, 1994, as there was no allegation of intent to evade payment. Reference was made to the judgment of the Hon'ble High Court of Gujarat in a similar case, emphasizing that penalty should not be imposed when tax was paid before the show cause notice, as per Section 73(3). The Tribunal held that since there was no intent to evade payment, the provisions of Section 73(4) did not apply, and the penalty was set aside following the precedent of the Karnataka High Court.In conclusion, the judgment by the Appellate Tribunal CESTAT AHMEDABAD addressed the issue of imposing a penalty under Section 76 of the Finance Act, 1994 for belated payment of service tax liability. The Tribunal considered the appellant's arguments, relevant legal provisions, and precedents from High Courts to decide that the penalty should not be imposed due to the absence of intent to evade payment. The decision was based on a thorough analysis of the facts and legal principles, ultimately setting aside the penalty and allowing the appeal.