TaxTMI 
TaxTMI 
2018 (2) TMI 845
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....nd interest of Rs. 12,63,324/- for the period from October 2002 to February 2009. Penalty was also proposed to be imposed, on the respondent-company, under Sections 76 & 77 of the Finance Act, 1994. 3. The Commissioner, vide Order-in-Original No.05/2010 dated 12.05.2010 has upheld the demand of interest, Rs. 12,63,324/- under Section 75 of the Finance Act, 1994 and appropriated sum of Rs. 5,23,151/- already paid towards interest liability prior to issue of show cause notice and also the balance interest amount of Rs. 7,40,163/- paid on 03.11.2009, after the issuance of show cause notice. 4. However, the Commissioner dropped the penal proceedings initiated in the show cause notice dated 21.10.2009 under Sections 76 & 77 of the Finance Act, 1994 on the grounds that (a) the service provider had discharged the outstanding service tax liability covered in the material period suo motto even before the issue of show cause notice and thus none of the circumstances envisaged under the relevant penal provisions is warranted for imposing penalty; (b) interest under Section 75 for delayed payment of service tax is mandatory; and (c) that the statute only provides power for imposition of ....
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....rder that due weightage has to be given in the proceedings since th entire service tax liability along with a substantial portion of the interest amount involved was paid suo motu well before the visit of the Audit party and also before the issue of show cause notice, is not well founded. 10. Learned counsel drew the attention of this Court to the Annexure I to the show cause notice dated 21.10.2009, wherein the details, of the delay in payment of service tax, has been extracted, Sl. No. Service Tax amount (Rs.) Service Tax Delay in Payment (no. of days) Payable between / on Paid on 1 4,84,182 25.11.02 to 25.06.03 14.07.03 231 to 19 2 1,28,786 25.08.03 to 25.09.03 25.02.04 184 to 153 3 10,00,000 25.09.03 to 25.05.04 16.08.04 326 to 83 4 55,037 25.05.04 26.05.06 731 5 1,46,181 25.06.04 09.09.04 & 26.05.06 76 & 623 6 1,58,048 25.07.04 09.09.04 & 06.05.06 46 & 623 7 2,23,586 25.08.04 09.09.....
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....od October 2002 to February 2009, and also the delayed payment of interest, for the aforesaid period, paid only on 23.10.2008, 09.04.2009, 25.04.2009 and 03.11.2009, respectively. 13. Learned Senior Standing counsel for Customs, Central Excise and Service Tax submitted that the Commissioner has observed that the respondent company had suo motu discharged outstanding tax liability covered in the material period, before issue of show cause notice and none of the circumstances envisaged under the relevant penal provisions warrant imposition of penalty. According to the learned counsel, this is wholly misdirected, in as much the show cause notice dated 21.10.2009 was issued proposing a penalty under Section 76 of the Finance Act, 1994, on the respondent company for non-payment of service tax within the prescribed dates. Mere default in complying with the provisions of the statute itself is sufficient for imposing penalty and in support of the above, he placed reliance on the judgment of the Hon'ble Supreme Court in Gujarat Travancore Agency Vs. Commissioner of Income Tax reported in 1989 (42) ELT 350 (SC). Further, the Commissioner's observation that the statute provides for....
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....been paid before issue of show cause notice, and the Hon'ble Tribunal, has upheld imposition of penalty under Section 76 of the Act. Other four decisions of tribunal, relied on by the Commissioner are not applicable to the present case, wherein service tax along with entire interest were paid before the issuance of show cause notice. 16. Learned counsel further submitted that Board's letter F.No.137/167/2006-CX4 dated 03.10.2007 and the provisions of Section 73 of the Finance Act, 1994 have not been correctly applied by the Commissioner to the present case. Section 73(3) of the Finance Act, 1994 provides for conclusion of adjudication proceedings on payment of service tax and interest before service of show cause notice. In the present case, major portion of the interest has been paid only after the issue of the show cause notice and as such, neither the provisions of sub-section (3) of Section 73 of the Finance Act, 1994 nor the instructions contained in Board's letter F.No.137/167/2006-CX.4 dated 03.10.2007 are applicable to the present case. 17. Learned counsel further submitted that the Commissioner has concluded that taking into consideration the facts and ci....
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....e issue and rendered a finding on the same. Without doing so, the tribunal, merely observed that the respondent had rendered cooperation to the department to discharge not only tax liability but also interest liability. Law provides mandatory penalty equal to unpaid service tax which also covers unpaid intent and there is no discretion vested with the authority to reduce the quantum of penalty. The order passed by the tribunal without considering the grounds raised by the revenue and the above legal position is erroneous, and therefore, liable to be set aside. 20. Heard Mr.A.P.Srinivas, learned counsel for the appellant and perused the material available on record. 21. Before adverting to the above submissions, let us have a cursory look at the relevant provisions in the Finance Act, 1994. Section 76 of the Finance Act, 1994, reads thus. "Penalty for Failure to Pay Service Tax: (1) Where service tax has not been levied or paid, or has been short-levied or short-paid, or erroneously refunded, for any reason, other than the reason of fraud or collusion or wilful mis-statement or suppression of facts or contravention of any of the provisions of this Chapter or ....
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....der; or (iii) appear before the Central Excise Officer, when issued with a summon for appearance to give evidence or to produce a document in an inquiry, shall be liable to a penalty which may extend to [ten thousand rupees] or two hundred rupees for everyday during which such failure continues, whichever is higher, starting with the first day after the due date, till the date of actual compliance; (d) who is required to pay tax electronically, through internet banking, fails to pay the tax electronically, shall be liable to a penalty which may extend to [ten thousand rupees]; (e) who issues invoice in accordance with the provisions of the Act or rules made there under, with incorrect or incomplete details or fails to account for an invoice in his books of account, shall be liable to a penalty which may extend to [ten thousand rupees]. 2. Any person who contravenes any of the provisions of this Chapter or any rules made there under for which no penalty is separately provided in this Chapter, shall be liable to a penalty which may extend to ten thousand rupees. 23. Relevant period for payment of service tax under consideration is between Octobe....
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....ating authority. Perusal of the adjudication order discloses that there was no service tax liability demand to be discharged at the time of adjudication. The respondent has also discharged interest liability prior to issuance of show-cause notice partly. The rest of that was discharged within few days of issuance of show cause notice. This is apparent from para 4.12 of the adjudication order. 2. The conduct of the respondent does not appear to be questionable in view of cooperation rendered to the Department to discharge not only tax liability but also interest liability. Accordingly, imposition of penalty shall not serve useful purpose of law for which revenue's appeal is dismissed." 28. Though, Mr.A.P.Srinivas, learned counsel appearing for Customs, Central Excise and Service Tax, reiterated the grounds of challenge, we are not inclined to accept the same for the reason that both the adjudicating authority viz., the Commissioner of Customs, Central Excise, and Service Tax, Coimbatore, as well as the final fact finding appellate authority, CESTAT, Madras, have categorically held that the assessee / respondent, has discharged a portion of interest liability prior to....