2015 (11) TMI 785 - AT - Service Tax

Tribunal Upheld Service Tax Liability, Set Aside Penalties

Galaxy Constructions Pvt. Ltd. Versus Commissioner of Central Excise, Nagpur

The tribunal upheld the appellant's liability for service tax under Commercial or Industrial Construction Services for a specific period but set aside ... Commercial or Industrial Construction Services - whether the appellant herein is liable to discharge the service tax liability under the category of Commercial or Industrial Construction Services for the period of 10-09-2004 to 29-09-2007 - Held that:- appellant had discharged the entire service tax liability before the issuance of show cause notice and has also discharged the interest thereof. We find that the having discharged the entire service tax liability and the interest thereof, the issue that arises for consideration as to whether penalties need to be imposed on appellant. In our considered view in the facts and of circumstances of this case, we find that the provisions of section 73(3) of the Finance Act 1994, would be applicable which mandates for non issuance of show cause notice by the authorities if tax and interest is paid of. In our considered view the show cause notice issued for imposition of penalties is not correct. Be that as it may, similar issue was decided by the Tribunal in the case of Manipal County Vs. Commissioner, Banglore [2009 (3) TMI 411 - CESTAT, BANGALORE] held that if demand of tax having being made good before the issuance of show cause notice, penalties need not to imposed. - Decided in favour of assessee. Issues Involved:Whether the appellant is liable for service tax under Commercial or Industrial Construction Services for a specific period.Analysis:The appeal was against an Order-in-Appeal, with the main issue being the appellant's liability to discharge service tax under Commercial or Industrial Construction Services for a specific period. The appellant had already paid the entire service tax liability and interest before the show cause notice was issued. The learned counsel argued on merits before the tribunal, seeking to set aside penalties invoking Section 80 due to full payment made. However, the tribunal found the arguments on merits unacceptable as the appellant had not contested the issue before the first appellate authority. Consequently, the tribunal upheld the confirmation of service tax liability and interest. The tribunal noted that as the appellant had already paid the tax and interest before the show cause notice, penalties should not be imposed as per Section 73(3) of the Finance Act 1994.The tribunal referenced a similar case where the Tribunal held that if the tax demand is met before the show cause notice, penalties should not be imposed. This decision was challenged by the Revenue in the High Court, but the appeal was dismissed. Following this precedent, the tribunal set aside the penalties imposed by the adjudicating authority and upheld by the first appellate authority. The tribunal disposed of the appeal by upholding the service tax liability and interest, while setting aside the penalties. This decision was pronounced in court, bringing the matter to a close.