Appellate tribunal upholds penalties for evasion and misleading conduct despite tax payment compliance.

The appellate tribunal upheld the impugned order, dismissing the appeal filed by the appellant based on the findings of intentional evasion and misleading conduct during the investigation. The penalties imposed under Section 78 of the Finance Act, 1994 were upheld despite the appellant's compliance with payment of service tax and interest before the notice was issued. The tribunal found evidence of evasion and lack of cooperation with the department, leading to the affirmation of penalties for failure to pay service tax on construction services provided.

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Issues Involved:
- Failure to pay service tax on construction services provided
- Imposition of penalty under Section 78 of the Finance Act, 1994

Issue 1: Failure to pay service tax on construction services provided
The appellant constructed a factory complex for a client and received payment without paying service tax. A show-cause notice was issued demanding service tax under works contract service, business auxiliary service, and goods transport agency service. The Commissioner confirmed the demands, including interest and penalties. The appellant argued that they paid the tax before the notice was issued, denying any intention to evade payment. However, investigation revealed that the appellant had not cooperated with the department and provided false information. The adjudicating authority found evidence of evasion and upheld the penalties imposed.

Issue 2: Imposition of penalty under Section 78 of the Finance Act, 1994
The appellant contended that they had paid the entire service tax along with interest before the notice was issued, thus penalty under Section 78 should not apply. However, the adjudicating authority found that the appellant had misled the department by submitting false information and attempting to evade service tax payment. The authority imposed penalties under Section 78, which the appellant paid under protest. Despite the appellant's compliance with the payment, the penalties were upheld by the appellate tribunal due to the intentional evasion of service tax.

In conclusion, the appellate tribunal upheld the impugned order, dismissing the appeal filed by the appellant based on the findings of intentional evasion and misleading conduct during the investigation.

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