2008 (7) TMI 76 - AT - Service Tax

Tribunal upholds decision dropping tax proceedings against business, deeming voluntary payment compliant with legal provisions.

CCE, Delhi Versus M/s. Brill Education (India) Pvt. Ltd.

The Tribunal upheld the decision of the Commissioner to drop proceedings against the business for a tax demand and penalty for the period July 2003 to ... Commercial training/coaching centre - Respondent declared the entire value of taxable service in their ST Returns – part of tax was deposited prior to issue of SCN & the balance amount was deposited along with interest after issue of SCN – in view of Circular 137/176/06, penalty is not imposable if tax is voluntarily deposited with interest before issue of SCN – hence penalty is imposable only for the amount deposited after issue of SCN – order of CCE of dropping the proceedings is sustainable Issues:1. Demand of tax and penalty for the period July 2003 to September 2003.2. Review of Adjudication Order under Section 84.3. Appeal against dropping of proceedings by the Commissioner.Analysis:1. The case involved a demand of tax and penalty for the period July 2003 to September 2003 on a business engaged in commercial training and coaching. The Respondent had deposited a partial amount of tax before the show cause notice was issued and paid the balance along with interest after the notice. The Adjudicating Authority confirmed the tax demand, appropriated the deposited amount, and imposed a penalty under Section 76 of the Finance Act, 1994. The Commissioner of Central Excise later dropped the proceedings initiated under a show cause notice dated 1.10.2007. This led to the Revenue filing an appeal challenging this decision.2. Upon review, it was found that the Respondent had declared the entire value of taxable service in their ST Returns. The Commissioner (Appeals) based the decision on a circular issued by the Central Board of Customs & Excise, clarifying that if the due Service Tax along with interest is voluntarily deposited by the taxpayer before the show cause notice is issued, the proceedings are deemed concluded. In this case, the Respondent had deposited a portion of the tax before the notice and informed the Department. The penalty was imposed only on the remaining tax amount. Consequently, the order of the Commissioner dropping the proceedings was upheld, and the appeal by the Revenue was rejected.3. The Tribunal, after hearing both sides and examining the records, concluded that the actions of the Respondent were in line with the circular and legal provisions. As the Respondent had voluntarily paid the due tax along with interest before the show cause notice was issued, the proceedings were considered concluded. The imposition of a penalty on the remaining tax amount was found to be appropriate. Therefore, the appeal filed by the Revenue challenging the dropping of proceedings by the Commissioner was dismissed.