Ganesh & Co. Vs Commissioner of GST & Central Excise (CESTAT Hyderabad)
The appeal concerns the imposition of penalties under the Finance Act, 1994, on a service provider engaged in Business Auxiliary Services. During an audit, it was found that the appellant had neither registered nor paid service tax for certain periods between August 2006 and March 2008, and had also short-paid tax during September 2008 to December 2009. A Show Cause Notice dated 11.01.2011 demanded service tax along with interest. The adjudicating authority confirmed the demand and imposed penalties under Sections 77 and 78. Although the appellant subsequently paid the entire service tax and interest before issuance of the notice, the Commissioner (Appeals) upheld the penalties, leading to the present appeal.
The appellant argued that it had discharged the entire tax liability along with interest in March 2010, prior to issuance of the Show Cause Notice. Therefore, it claimed immunity from penalties under Section 73(3) of the Finance Act, 1994, which provides that no penalty shall be imposed where tax and interest are paid before issuance of notice. The appellant also contended that there was no fraud, suppression, or willful misstatement involved.
The department, on the other hand, argued that the appellant had failed to register and pay tax initially, and that payment was made only after detection during audit. It was contended that this amounted to suppression of facts with intent to evade tax, and therefore penalties were justified.
