2018 (1) TMI 425 - AT - Service Tax

Tribunal sets aside late fees under Finance Act, 1994. Compliance before notice issued precludes fees.

M/s. Pramar Bhagwanji Jethalal And Sons Versus Commissioner of Central Excise & ST, Rajkot

The Tribunal allowed the appeal, setting aside the imposition of late fees under Section 70 of the Finance Act, 1994. The Tribunal held that the ... Penalty u/s 70 of FA 1994 - non-filing of ST-3 returns - Held that: - in case the assessee on detection has paid the amount of service Tax to the department, in that circumstances, SCN is not required to be issued. Admittedly, the ld. Commissioner (Appeals) has accepted the provisions of Section 73(3) of the Act is applicable to the appellant - the ld. Commissioner (Appeals) has fell in error for imposing late fees on the appellant by invoking Section 70 of the Finance Act, 1994 - penalties set aside - appeal allowed. Issues:Appeal against penalty for non-filing of ST-3 returns under Section 70 of Finance Act, 1994. Adjudication of penalties under Section 78 and late fees under Section 70. Benefit of Section 73(3) of the Act in relation to payment of service tax.Analysis:The appellant appealed against the penalty imposed for not filing ST-3 returns under Section 70 of the Finance Act, 1994. The investigation revealed underpaid service tax, which the appellant paid along with interest before the show cause notice was issued. The adjudicating authority appropriated the amount paid and imposed penalties under Section 78, along with late fees under Section 70 of the Act. The Commissioner (Appeals) granted the benefit of Section 73(3) of the Act, relieving the appellant from penalty under Section 78 but upheld the late fee under Section 70. The appellant challenged this decision.During the appeal, the appellant's representative argued that if Section 73(3) benefit is granted, no penalty should be imposed. The Revenue's representative supported the impugned order's findings. Upon hearing both parties, the Tribunal noted that Section 73(3) allows the assessee to pay service tax upon detection without the need for a show cause notice. The Commissioner (Appeals) erred in imposing late fees under Section 70 despite accepting the applicability of Section 73(3) to the appellant. Consequently, the Tribunal set aside the order regarding late fees under Section 70.In conclusion, the appeal was allowed based on the Tribunal's findings regarding the incorrect imposition of late fees under Section 70 of the Finance Act, 1994. The Tribunal's decision was made after considering the provisions of Section 73(3) and the appellant's compliance with payment of service tax before the issuance of a show cause notice.