Department's appeal dismissed as service tax payment before notice shows no evasion intent under Section 73

Commissioner of CGST & Central Excise Thane, Assistant Commissioner CGST & Central, Superintendent, Division -1, Range-5, Union of India Versus Tharwani Infrastructures (vice Versa)

Commissioner of CGST & Central Excise Thane, Assistant Commissioner CGST & Central, Superintendent, Division -1, Range-5, Union of India Versus Tharwani ... Issues Involved:
1. Intention to evade service tax.
2. Invocation of extended period of limitation for issuing Show Cause Notice.
3. Applicability of sub-section (3) of Section 73 of the Finance Act, 1994.
4. Setting aside penalties under Sections 77 and 78 of the Finance Act, 1994.
5. Consistency with the decision in Master Marine Services P. Limited.

Summary:

1. Intention to Evade Service Tax:
The Tribunal held that the Respondent had paid the entire service tax and interest before the issuance of the show cause notice, indicating no intention to evade service tax. The Court agreed, finding no substantial question of law on this issue.

2. Invocation of Extended Period of Limitation:
The Tribunal found that invoking the extended period under the proviso to sub-section (1) of Section 73 of the Finance Act, 1994 was inappropriate as the Respondent had paid the service tax before the issuance of the show cause notice. The Court upheld this view, noting that there was no intention to evade payment of service tax.

3. Applicability of Sub-section (3) of Section 73:
The Tribunal applied sub-section (3) of Section 73, which states that if the service tax is paid before the issuance of the show cause notice, the Department cannot issue such a notice. The Court agreed, emphasizing that the Respondent's payment of tax and interest before the notice precluded the need for further action.

4. Setting Aside Penalties:
The Tribunal set aside the penalties imposed under Sections 77 and 78 of the Finance Act, 1994, as the Respondent had complied with the tax payment before the show cause notice. The Court found no error in this decision.

5. Consistency with Master Marine Services P. Limited:
The Tribunal did not follow its previous decision in Master Marine Services P. Limited, considering the specific facts of the current case. The Court supported this discretion, finding no inconsistency warranting intervention.

Conclusion:
The Court dismissed the Revenue's appeal, agreeing with the Tribunal's findings that the Respondent had no intention to evade service tax and had paid the dues before the issuance of the show cause notice, thus nullifying the need for extended period invocation and penalties. The Court also directed the Department to process the Respondent's refund application expeditiously.