2017 (9) TMI 789 - AT - Service Tax

Timing of Payment Crucial in Penalty Matters: Rectification of Mistake Application Dismissed

The Rectification of Mistake application was dismissed by the Tribunal as the appellant's payment of Rs. 12,18,423 towards the penalty of Rs. 34,55,247 ... Rectification of Mistake - Held that: - the applicants are seeking benefit of ₹ 12,18,423/- already paid by them against the confirmation of penalty of ₹ 34,55,247/-. Annexure B of the show-cause notice shows that the said duty of ₹ 12,18,423/- was paid during the period 28.08.2008 to 08.04.2009 - It is obvious that the amount paid by the appellant was subsequent to the action initiated by the revenue and not prior to detection by the revenue. In these circumstances, no benefit in penalty in respect of the said amount can be granted - ROM application dismissed. Issues: Rectification of Mistake application in a case involving penalty imposition without considering the amount already paid and appropriated.Analysis:1. Rectification of Mistake Application: The Maharashtra State Employees Cultural Society filed a Rectification of Mistake application regarding Order no. A/85846/17/SMB dated 10.02.2017, which confirmed a penalty of Rs. 34,55,247 without accounting for the amount of Rs. 12,18,423 already paid and appropriated by the appellant.2. Contentions of the Appellant: The appellant's counsel highlighted that although a show-cause notice was issued for the recovery of Rs. 34,55,247, the Order-in-Original confirmed the same amount without considering the Rs. 12,18,423 already paid and appropriated. The counsel argued that the penalty was upheld without any allowance for the amount previously settled.3. Response of the Respondent: The Advocate for the respondent resisted the Rectification of Mistake application, indicating a disagreement with the appellant's claim.4. Decision and Reasoning: Upon reviewing the application, the Member (Technical) found that the appellant sought the benefit of the amount already paid, Rs. 12,18,423, against the confirmed penalty of Rs. 34,55,247. The Tribunal noted that the duty amount was paid between 28.08.2008 to 08.04.2009, after the revenue initiated actions on 25.02.2008, followed by reminders. The Tribunal concluded that since the payment was made after the revenue's pursuit and not before detection, no penalty benefit could be granted. Consequently, the Rectification of Mistake application was rejected.5. Conclusion: The Rectification of Mistake application was dismissed, and the decision was pronounced in court on 17/08/2017. The judgment highlights the importance of the timing of payments in penalty considerations and the significance of the sequence of events in determining liability.