2008 (3) TMI 36

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....he departmental authorities informed that they are liable to pay Service Tax, they immediately paid the Service Tax along with interest much before the issue of show cause notice. The period involved in this case is from 09.07.2004 to 31.3.2006. The show cause notice was issued on 9.10.2006. But even before the issue of the show cause notice, the Service Tax along with interest liability was paid. The appellants invited our attention to Section 73 (3) of the Finance Act by which there was no need for issue of show cause notice in view of the discharging of Service Tax liability along with interest by the appellant, the moment the non-payment was pointed out to them. In spite of the above fact, Revenue authorities proceeded against the appel....

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....x could not have been demanded from the service recipient prior to 18/04/2006 and hence for this reason alone, the Service Tax deposited with interest would become refundable and further no penalty could be imposed at all thereto. (iv) Further, in the facts and circumstances herein, there was a bona fide doubt regarding the activity being subject to levy of Service Tax in the hands of service recipient and thus would constitute reasonable cause for not imposing penalty under Section 80 of the Finance Act, as laid down in several cases including Larger Bench decision rendered in the case of ETA Engineering Vs. CCE, reported in 2004 (174) ELT 19 and several judgments rendered in this regard. (v) Even otherwise, the mere reason of paymen....

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....lenging the imposition of penalty. The appellants have drawn our attention to Section 73 (3) of the Finance Act which is reproduced herein below: Section 73 (3): Where any Service Tax has not been levied or paid or has been short levied or short paid or erroneously refunded, the person chargeable with the Service Tax, or the person to whom such tax refund has erroneously been made, may pay the amount of such Service Tax, chargeable or erroneously refunded, on the basis of his own ascertainment thereof, or on the basis of tax ascertained by a Central Excise Officer before service of notice on him under Sub-Section (1) in respect of such Service Tax, and inform the Central Excise Officer of such payment in writing, who, on receipt of such ....