• Jul
  • 22
  • 2012

No penalty can be imposed if Service Tax liability & interest thereof stand deposited u/s. 73(3)

CESTAT, AHMEDABAD BENCH

IMDC Ltd. V/s.  Commissioner of Central Excise

ORDER NOS. A/297/WZB/AHD OF 2012 &

S/335/WZB/AHD OF 2012

APPLICATION NO. ST/S/1431 OF 2011

APPEAL NO. ST/617 OF 2011

MARCH 14, 2012

ORDER

1. This Stay Petition is filed for waiver of pre-deposit of penalty imposed by the adjudicating authority and upheld by first appellate authority.

2. The penalty has been imposed on the ground that the appellant has contravened the provisions of Section 76 by delaying the payment of Service Tax to Govt. of India.

3. After hearing both sides for sometime on the matter, I find that the appeal itself can be disposed as it lies in narrow compass. Accordingly, after allowing the application for waiver of penalty, I take up the appeal for disposal.

4. The facts are not in much dispute. The appellant had been paying the Service Tax, after taking the registration. But, during the period in question, had delayed the payment of Service Tax ranging from 34 to 370 days. It is also not in dispute that the Service Tax liability and interest thereof was deposited/discharged by the appellant before issuance of Show-Cause Notice. Show-Cause Notice was issued for imposition of penalty which got confirmed by first appellate authority.

5. Ld. Counsel would draw my attention to the provisions of Section 73(3) of Finance Act, 1994, more specifically to explanation (ii) and submit that having paid the entire Service Tax liability with interest, the lower authorities should not have issued any Show-Cause Notice for imposition of penalty. He would rely upon the decision of this Tribunal in the case of Krishna Security & Detective Services v. CST [Final Order No. 1514 of 2011, dated 10-8-2011] and in the case of Voltamp Transformers Ltd v. CCE [Final Order No. A/123/WZB/AHD/2012, dated 20-1-2012].

6. Ld. SDR reiterated the findings of the lower authorities and also submits that Section 73(3) only talks about non-issuance of Show-Cause Notice for the recovery of Service Tax and interest thereof, but does not stop the Revenue from issuing Show-Cause Notice for imposition of penalty under Section 76.

7. After considering the submissions made by both sides, I find that the provision of Section 73(3) and explanation (ii) to said Section (which was introduced from 8.5.10), specifically indicate that if Service Tax liability and interest thereof stand deposited, there is no need for issuing Show-Cause Notice even for penalty. I find that the ld. Counsel was correct in relying upon the judgment in the case of Krishna Security & Detective Services (supra).

8. Provisions of Section 73(3) are very clear and the decision of the Tribunal in the case of Krishna Security & Detective Services (supra) also lay down the ratio that no penalty can be imposed if the Service Tax liability and interest thereof stand deposited under the Section 73(3).

9. Accordingly, I find that the appellant has made out a case in its favour. Respectfully following the judgment in the case of Krishna Security & Detective Services (supra), I hold that the impugned order is liable to be set aside.

10. The impugned order is set aside and the appeal is allowed.


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