Case Law Details
National Power Engineering Company Vs Commissioner of CGST & Central Excise (CESTAT Kolkata)
Introduction: In a landmark case between the National Power Engineering Company and the Commissioner of CGST & Central Excise, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled that no penalty should be imposed when the entire Service Tax was discharged along with interest before the issuance of the Show Cause Notice.
Analysis: The crux of the case was that the appellant had not paid the Education Cess and SHE Cess from April 2008 to March 2012. This non-payment was detected during an audit in November 2012, prompting the appellant to pay the due amounts with interest immediately. However, the department proceeded with a Show Cause Notice and imposed a penalty under section 78. CESTAT noted that the appellant paid the amounts immediately upon notification, aligning with Section 73(3) of the Finance Act, 1994, which stipulates that no proceedings should be undertaken in such cases. The tribunal referenced previous cases where it was established that no penalty is imposed when Service Tax and interest are paid immediately upon detection by the department.
Conclusion: CESTAT’s ruling brings to light the crucial aspect of Section 73(3) of the Finance Act, 1994, clarifying that no penalty is applicable when the full Service Tax is discharged along with interest before the issuance of a Show Cause Notice. This judgement not only provides relief to the appellant but also serves as a benchmark for similar cases where tax dues are paid promptly upon detection, underlining the principle that the intent of tax laws is not to punish taxpayers who act in good faith.
FULL TEXT OF THE CESTAT KOLKATA ORDER
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