Tribunal Removes Penalties Due to Lack of Suppressed Facts; Appellant's Service Tax and Interest Payments Confirmed.

The Tribunal set aside the penalties imposed under Section 78, finding no evidence of suppression of facts by the appellant, who had paid the service tax and interest prior to the issuance of the show cause notice. The Tribunal, referencing a decision by the Hon'ble Gujarat HC, concluded that the appellant's financial documents accurately reflected all transactions. Consequently, while the service tax and interest payments were confirmed, the appeal was allowed, and penalties were removed.

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Issues involved:
The issues involved in the judgment are non-payment of service tax under Construction Services falling under Section 65(105)(zzq), imposition of penalty under Section 78, and alleged suppression of facts with intent to evade payment of service tax.

Non-payment of service tax:
The appellant, engaged in providing construction services, was found to have not discharged service tax under Construction Services falling under Section 65(105)(zzq) during the audit period from October 2007 to September 2012. Although the appellant paid the service tax belatedly along with interest in November 2012, no penalty was paid. A show cause notice was issued invoking the extended period, proposing to recover the service tax, interest, and impose a penalty. The original authority confirmed the demand of service tax, ordered appropriation of the amount already paid, and imposed a penalty under Section 78. The appellant contested the penalty before the Tribunal.

Imposition of penalty:
The appellant argued that they had paid all outstanding dues of service tax along with interest in 2012 itself, as per the show cause notice. The appellant maintained that there was no evidence of suppression of facts in the financial statements or balance sheet, as alleged by the department. The appellant's consultant referred to a decision of the Hon'ble Gujarat High Court in a similar case where the penalty under Section 78 was set aside, emphasizing that there was no suppression of facts. The appellant requested for the penalty to be set aside.

Alleged suppression of facts:
Upon hearing both parties, the Tribunal observed that the appellant did not contest the service tax or interest paid. The show cause notice was issued post-audit verification, and it was noted that the appellant had discharged the service tax along with interest before the notice was issued. As per Section 73(3) of the Finance Act, 1994, no show cause notice should be issued if the service tax and interest are already paid. The Tribunal found that the appellant had properly reflected all transactions in their accounts and financial documents. Referring to a previous decision of the Hon'ble Gujarat High Court, the Tribunal concluded that there was no evidence to substantiate the allegation of suppression of facts by the appellant. Therefore, the penalties imposed were set aside, while confirming the service tax and interest payment. The appeal was allowed accordingly.

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